Zcash Reveals Orchard Pool Flaw; ZEC Slides More Than 40%

Zcash has disclosed a critical vulnerability tied to its Orchard Pool, triggering a sharp sell-off in ZEC as the market digested the news, CoinDesk reported. Arthur Hayes, chief investment officer at Maelstrom and a BitMEX cofounder, said he sold his entire ZEC position after the disclosure. He wrote on X that he had not fully appreciated how the issue could undermine his core confidence in Zcash's supply integrity. While he views the odds of real-world malicious inflation as extremely low, he said he cannot currently prove cryptographically that such an outcome is impossible. The vulnerability has been fixed. Zcash said the issue had existed since 2022, was discovered on May 29, and was resolved on June 1. Shielded Labs said the flaw could, in theory, have been exploited to mint an unlimited amount of ZEC, potentially compromising trust in the token's supply. ZEC fell more than 40% within 24 hours, at one point dropping over 40% intraday. Hayes said the speed of the decline led him to reassess his risk exposure and close the position. He added that he may buy back ZEC if his assessment proves wrong, framing the sale as a response to supply credibility concerns rather than evidence that the vulnerability had been exploited. Arkham, an onchain data platform, said the paper value of a large holder's ZEC position of roughly $174 million has been cut by more than half, adding that the holder has not sold any ZEC in the past six months. Market participants noted the episode's significance goes beyond near-term volatility, raising broader questions about supply credibility in privacy-focused tokens. For Zcash, confidence is likely to hinge on further disclosures and how the community responds in the wake of the patch.