Hayes Exits ZEC Over Unresolvable Supply Uncertainty BitMEX co-founder Arthur Hayes (@CryptoHayes) has sold his entire $ZEC position after a critical vulnerability in Zcash's Orchard shielded
BitMEX co-founder Arthur Hayes (@CryptoHayes) has sold his entire $ZEC position after a critical vulnerability in Zcash's Orchard shielded pool raised concerns he said he could not formally dismiss. Hayes stated that while he considers actual exploitation unlikely, the inability to cryptographically rule it out was enough to force him out of the trade.
The vulnerability was discovered on May 29 by independent security researcher Taylor Hornby during a protocol audit for Shielded Labs. A security researcher discovered a critical vulnerability in Zcash's Orchard transaction pool that could have allowed exploiters to mint "unlimited" amounts of counterfeit ZEC. Due to Orchard's privacy-oriented nature, it is cryptographically impossible to prove whether the vulnerability had already been exploited before it was patched. That last point appears to be at the core of Hayes' concern.
Hayes said the issue challenged his investment thesis around privacy-focused assets. He noted that while he took profits on the trade, the incident introduced a degree of uncertainty that he was not willing to hold. He added that he and his team will continue monitoring the situation and may look to repurchase $ZEC at a lower valuation if the concerns prove unfounded.
Zcash developers completed a rare emergency network upgrade after discovering a critical soundness bug in the Orchard shielded pool, the blockchain's newest privacy layer. The vulnerability could have allowed invalid state transitions inside Orchard, potentially enabling double spending within the pool. The Zcash Foundation said there was no evidence the bug was exploited, no unauthorized value creation, and no impact on user privacy. The vulnerability was discovered on May 29 by Taylor Hornby, an independent security researcher conducting a protocol audit for Shielded Labs.
Phase one landed on June 2. A temporary soft fork activated at mainnet block height 3,363,426, around 02:00 UTC, disabling Orchard actions across the network while developers prepared the corrective code. Phase two followed on June 3. The NU6.2 hard fork activated at block 3,364,600 at approximately 00:05 EDT, re-enabling Orchard with a corrected circuit.
Despite the patch, the auditability question raised by Hayes reflects a genuine technical limitation. While Shielded Labs said that actual exploitation of this vulnerability is unlikely, its team is exploring a proposed network upgrade to allow anyone to verify the integrity of the Zcash supply and prove that there are no counterfeit Zcash in the Orchard pool.
The exit marks a notable reversal for Hayes, who had previously described $ZEC alongside HYPE and NEAR as his core altcoin holdings. Last month, he referred to NEAR, HYPE, and Zcash as his "holy trinity" of altcoins, signaling strong confidence in all three assets. Whether the Orchard fix and any forthcoming supply-integrity upgrade are enough to bring him back remains to be seen.
Sources:Crypto Briefing: Zcash fixes critical Orchard bug after emergency network upgradeThe Block: Security researcher finds Zcash vulnerability allowing unlimited counterfeit mintingThe Crypto Times: Zcash executes emergency fork after critical Orchard vulnerability discovery
