Key facts
- Arthur Hayes exited his entire Zcash position due to the Orchard flaw.
- The Orchard flaw could have allowed undetected minting of ZEC.
- Zcash price fell over 35% within 24 hours of the disclosure.
- Trading volume surged by 46%, reaching $1.7 billion daily spot volume.
- Approximately $49 million in leveraged positions were liquidated.
- The flaw was patched by June 1, but prior exploitation remains uncertain.
Zcash experienced a sharp market selloff after developers disclosed a critical flaw in its Orchard privacy pool, which could have allowed for the undetected minting of counterfeit tokens. Arthur Hayes announced he had exited his entire Zcash position shortly after the vulnerability became public, citing concerns about supply integrity and the inability to cryptographically prove that no prior exploitation had occurred. The Zcash price fell over 35% from $611 to around $386 within 24 hours of the announcement, accompanied by a 46% surge in trading volume, which crossed $1.7 billion daily. Approximately $49 million in leveraged positions were liquidated, with long traders accounting for over $41 million of those losses. Developers confirmed the flaw was patched by June 1, but the uncertainty surrounding potential past exploitation continues to impact market sentiment and renews debate about the inherent risks in privacy-focused cryptocurrency systems. Zcash teams are planning a future upgrade to migrate balances into a new shielded pool to enhance token integrity verification.