ZEC Drops Over 56% Amid Concerns Over Privacy Vulnerability
ZEC Drops Over 56% Amid Concerns Over Privacy Vulnerability
https://www.kucoin.com/news/flash/zec-plummets-over-56-amid-privacy-vulnerability-concerns
Publish Date: 2026-06-05 06:32:00
Source Domain: www.kucoin.com
Author: Zhou, ChainCatcher
On June 5, the leading privacy coin ZEC experienced a single-day peak decline of over 56%, erasing nearly two months of gains and temporarily losing approximately $5 billion in market capitalization.
Datashows,the total 24-hour liquidation volume for ZEC contracts across the network reached approximately $100 million, with long positions accounting for over $760 million in liquidations, ranking second only to BTC and ETH.
Image source: RootData
The crash was triggered by a zero-knowledge proof vulnerability that had lain dormant for four years in Zcash’s latest privacy transaction pool, theoretically allowing attackers to infinitely forge ZEC while remaining undetected under privacy protections.
The good news is that the vulnerability was permanently patched via a hard fork on June 3. The bad news is that, due to the privacy features of the Orchard pool, no one can use cryptography to prove that the vulnerability was never exploited over the past four years, leading to doubts in the market about the integrity of ZEC’s supply over the last four years.
BitMEX co-founder Arthur Hayes announced the liquidation of his entire ZEC position, with on-chain whale short positions realizing substantial profits, significantly undermining market confidence.
How do vulnerabilities arise, and how are they discovered?
The Orchard pool is the third-generation privacy layer launched by Zcash in May 2022. Due to insufficient constraint conditions for one element in the circuit, an attacker could inject false inputs into elliptic curve multiplication operations while still passing circuit verification, enabling the infinite creation of forged ZEC within the pool. Because of Orchard’s inherent privacy design, this forgery leaves no on-chain traces detectable by external observers.
According to reports, independent security researcher Taylor Hornby discovered the vulnerability on May 29. In April, the independent security organization Shielded Labs commissioned…
