Zcash has seen a catastrophic price fall in the last 24 hours — some believe it's not over yet. | Source: CCN.
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Key Takeaways
Zcash crashes after critical flaw disclosure.
Supply integrity concerns drive panic selling.
Arthur Hayes exits position amid community backlash.
Privacy-focused crypto industry darling Zcash crashed by more than 50% over the past 24 hours after developers disclosed a dormant 4-year-old critical vulnerability.
The discovered bug would allow attackers to create unlimited counterfeit tokens undetected, sparking widespread concerns about the network’s integrity.
Zcash’s price fell as much as 57% before recovering slightly to trade around $264 on Friday — but some analysts have warned it could drop all the way to zero if the selloff continues.
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The vulnerability, discovered on May 29 by security researcher Taylor Hornby, affected Zcash’s Orchard shielded pool.
Zcash development organization Shielded Labs admitted it had been present since Orchard was activated in May 2022.
“The vulnerability could have been exploited to undetectably create an unlimited amount of counterfeit ZEC within Orchard,” Shielded Labs said in a statement published on X on Thursday.
Developers deployed an emergency fix on June 1 and completed ecosystem-wide remediation by June 2.
However, the disclosure has rattled investors because there is no cryptographic way to definitively determine whether the flaw was exploited before it was patched.
“Because of the privacy properties of Orchard, there is no way to cryptographically prove whether the vulnerability was exploited before it was remediated,” Shielded Labs said.
Four-Year-Old Bug
According to Shielded Labs, Hornby discovered the bug while conducting security research commissioned by the organization.
The flaw stemmed from what developers described as “an under-constrained element of the Orchard circuit.”
This allowed arbitrary false inputs to be supplied during an elliptic curve multiplication while still passing verification checks.
Shielded Labs said Hornby successfully developed a working exploit and demonstrated in a local testing environment that it could generate “unlimited, undetectable counterfeit ZEC.”
“The vulnerability was real and exploitable,” the organization said.
Adding: “If he had run the same tool on Zcash mainnet it would have generated unlimited, undetectable counterfeit ZEC in his mainnet Zcash wallet.”
The vulnerability remained undiscovered for more than four years, from Orchard’s launch in May 2022 until its discovery and remediation last week.
Despite the severity of the flaw, Shielded Labs said it believes prior exploitation was unlikely, arguing that the bug had evaded scrutiny from leading cryptographers for years.
It was only recently discovered through a targeted security effort using advanced AI tools, the firm said.
However, the organization acknowledged that users should not rely solely on those assurances.
Zcash Price Plummets
The disclosure triggered one of the sharpest declines in crypto this year.
Zcash’s price was down roughly 55% over the previous 24 hours, compared with Bitcoin’s decline of less than 3%.
Trading volume jumped nearly 66% to approximately $2.2 billion, suggesting widespread liquidation and panic selling by investors.
The selloff accelerated further after prominent crypto investors publicly disclosed exiting positions.
Zcash price has plummeted | Source: CoinMarketCap
Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, said he had sold his firm’s entire Zcash position following the disclosure, putting an end to his “holy trinity” prediction.
“While I think it’s extremely unlikely of any minting, it cannot be formally cryptographically proved impossible,” Hayes wrote on X.
“The privacy from AI, govt, big tech narrative demands perfection not improbability.”
It comes after Hayes announced on Wednesday that he had dumped his entire HYPE position, worth over $18M, as well as his $NEAR holdings.
“I just dumped my entire $HYPE and $NEAR position, I will explain why in my essay ‘Reality Test’ dropping next Tuesday,” Hayes wrote on X.
It comes just four days after Hayes had publicly endorsed Hyperliquid, posting on June 1: “Meow – $HYPE to $150.”
Zcash Price To Zero?
The disclosure reignited memories of a previous inflation bug discovered in Zcash years ago, with some crypto commentators warning that the latest incident could send the price to ultimate collapse.
Crypto commentator Udi Wertheimer wrote on X that the incident was not unprecedented.
“btw this isn’t the first time a bug like this was discovered in zcash,” Wertheimer said.
Adding: “last time it was disclosed after being a year+ in the wild and everyone lost faith and zcash went to zero for 7 years, until they found a new generation of buyers who doesn’t know the history.”
btw this isn’t the first time a bug like this was discovered in zcash. last time it was disclosed after being a year+ in the wild and everyone lost faith and zcash went to zero for 7 years, until they found a new generation of buyers who doesn’t know the history (that’s you)
Other market participants argued the implications extended beyond Zcash itself.
“What happened to Zcash is catastrophically bearish for the entire crypto industry and I’m not sure people have realized that yet,” one widely followed crypto account wrote on X.
The user added that advances in AI could increasingly expose vulnerabilities in other complex blockchain systems. They said this could potentially alter the risk-reward profile for investors across the sector.
Shielded Labs said it plans to publish additional details next week regarding a proposed network upgrade designed to prove the integrity of Zcash’s supply.
The organization is also launching a formal verification effort for the Orchard circuit and expanding its security team.
“This was a serious vulnerability, and we believe it’s important to be transparent about what it means for Zcash users,” Shielded Labs said.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
