Cameron Winklevoss defended Zcash after the privacy coin fell by up to 45% and shares of Cypherpunk Technologies fell by 37% after revealing a critical bug that could have allowed the creation of an unlimited number of fake ZECs.
summary
- Cameron Winklevoss defended Zcash after an Orchard pool blunder led to a sharp sell-off across ZEC and related stocks.
- Shielded Labs confirmed that the vulnerability may have enabled unlimited ZEC generation before the emergency fix was published on June 2.
- Arthur Hayes has exited his position at ZEC entirely, while Cypherpunk Technologies said there was “no evidence” that the exploit had ever been used.
According to a post dated June 5, Cameron Winklevoss defended Zcash when investors reacted to the revelation of a critical security vulnerability in the network’s protected Orchard pool. While acknowledging that errors can appear in any blockchain system, he said the focus should be on how quickly researchers detect and address them.
“When it comes to any L1 level, there are going to be bugs. What’s important is that there are world-class researchers focused on strengthening the network and staying ahead of the bad guys.”
His comments came as pressure spreads across companies linked to the Zcash ecosystem.
Shares of Cypherpunk Technologies, a publicly traded company focused on aggregating Zcash, fell to their lowest level since March. The stock fell 37% to $0.59 after hitting an intraday low of $0.53, Yahoo Finance data showed. Meanwhile, shares of Gemini-linked GEMI fell 4.4% to $4.41 as technology stocks weakened in US markets.
Shielded Labs says the exploit was possible before the emergency fix
Details released by Shielded Labs showed that it was security researcher Taylor Hornby find out The vulnerability was released on May 29 during an AI-assisted audit. According to the organization, the defect remained undetected for approximately four years inside the protected swimming pool at Orchard.
Shielded Labs said that Hornby successfully used the vulnerability in a local test environment to create an unlimited number of fake ZECs without detection. The organization added that the same method could have worked on the Zcash mainnet before the issue was corrected.
An emergency response led by the Zcash Open Development Lab and other ecosystem contributors resulted in the network upgrade being completed by June 2. The fix temporarily halted Orchard activity before restoring it with the patched code.
Despite the fix, Shielded Labs said cryptographic tools alone cannot determine whether the exploit was used before the patch because Orchard transactions are designed to preserve privacy.
While the organization described previous exploitation as unlikely, it stressed that users should not rely solely on this assessment.
The Zcash Foundation later released Zebra 5.0.0 through the NU6.2 hard fork, re-enabling Orchard with the patched circuit. According to the institution, no evidence of unauthorized value creation has been identified.
Market participants reduced exposure as uncertainty increased
Selling across Zcash-related assets intensified following the disclosure. According to data from crypto.news, Zcash (Like you) fell more than 45% in 24 hours, reaching an intraday low of $264.80 on June 5. The privacy coin has since pared some of those losses and is trading at around $361 at press time.
Among those who reduced exposure was BitMEX co-founder Arthur Hayes. In a post on X, Hayes said that He sold his entire position in ZEC Because the incident undermined his investment thesis on privacy-focused assets.
Hayes wrote that the exploit seemed “highly unlikely” but argued that the inability to definitively rule it out created a problem for the privacy-focused cryptocurrency.
“The privacy afforded by AI, government, and the big tech narrative demands perfection, not improbability. I read about the exploit day after day, and didn’t appreciate how it violated my narrative mental map. Unpacking the 30% made me rethink, and I had to make a profit out of the entire position.”
Meanwhile, Cypherpunk has pushed back against concerns about counterfeit coins entering circulation. In a statement posted on X, the company said there was “no evidence” that the vulnerability was exploited. It is too Argue That the attacker would have little incentive to hold onto counterfeit ZEC coins through a large bull market rather than selling the coins earlier.
