Just five wallets opened about $72 million in ZEC shorts before Zcash's four-year privacy bug was even discovered, raising questions about whether some traders knew early.
Allium, an on-chain data platform, said in a June 10 situation report that ZEC fell 64% on Hyperliquid, a decentralized perps crypto exchange, from a May 25 high of $685 to a June 5 intraday low of $247.
According to Allium's findings, ZEC trading volume hit $283 million in one hour on May 26, about 12 to 13 times the normal hourly rate of $20 million to $25 million.
That was three days before the bug was privately discovered on May 29 and more than a week before public disclosure on June 5.
The bug sat in Orchard, Zcash's privacy layer for hidden transactions, and had been live since May 2022. It could have let someone mint unlimited ZEC without detection.
However, a soft fork disabled the issue on June 2, and an emergency patch followed on June 3.
More context: Why Zcash infinite mint bug scared traders? Explain in 5 cards
Chart showing when anomalous ZEC shorts showed up. Source: Allium
Allium flagged five profitable wallets that opened ZEC shorts on May 25 or May 26. Their short notional totaled about $72 million, and their realized profit totaled about $3.43 million.
- The largest of those wallets opened a $34.5 million short and made $998,000.
- Another opened a $17.7 million short and made $724,000.
But as Allium's report notes, the data "shows behavior, not intent."
Allium
- The second wave came after the patch. On June 5, two days after the emergency fix, $560 million traded in one hour on Hyperliquid, with 179,224 fills, as ZEC hit $247.
Allium linked that break to Arthur Hayes, the BitMEX co-founder and founder of Maelstrom, who publicly said in a June 4 post on X that he had sold his entire ZEC position.
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