Ethereum-based privacy project Zipcoin has announced its shutdown following an exploit involving its locked tokens and a separate warning that its codebase and private keys may have been comp
Ethereum-based privacy project Zipcoin has announced its shutdown following an exploit involving its locked tokens and a separate warning that its codebase and private keys may have been compromised.
The October 22 decision follows a security breach at UNCX Network that exposed approximately 1.1% of ZC’s total supply. Zipcoin initially attempted to contain the fallout through token buybacks but has now abandoned development following the additional security concerns.
The team gave holders a six-hour window to exit their positions before a planned liquidation of its remaining treasury allocation, representing approximately 2.2% of the token supply. The sale was scheduled for noon U.S. Eastern Time on October 22.
Zipcoin’s difficulties began with the UNCX Smart Token Vesting V2 exploit on October 14, when attackers manipulated internal share-accounting calculations to withdraw tokens belonging to other vesting positions.
The vulnerability affected 10 tokens across Ethereum, BNB Chain, Base and Robinhood Chain, with 11 confirmed unauthorized withdrawal transactions.
On Ethereum, attackers removed approximately 10.84 million ZC from the vesting manager after accounting for returned tokens, equivalent to roughly 1.1% of Zipcoin’s one-billion-token maximum supply.
The primary attacker subsequently converted stolen ZC into approximately 6.52 ETH, while separate copycat transactions extracted additional proceeds.
Zipcoin initially continued operating and used treasury resources to support token buybacks. However, a subsequent security warning reportedly indicated that its entire codebase had been compromised, potentially exposing private keys and sensitive project infrastructure.
The team cited this additional threat in its decision to close. The full extent of the alleged codebase compromise, including which keys may have been exposed, has not been established through a public technical investigation.
A different codebase exposure affected Grafana earlier this year, when unauthorized GitHub access allowed an attacker to download company repositories. Zipcoin’s reported concerns extend to potentially compromised private keys, although independent confirmation remains unavailable.
The closure has triggered criticism from investors and Stockereum, the Ethereum launchpad through which ZC originally entered circulation.
Stockereum demanded the return of 12.66 ETH, alleging that the funds had been transferred to Zipcoin’s foundation wallet and should be returned following the shutdown.
The launchpad’s transaction dashboard also records a 12.660 ETH entry associated with the ZC Foundation, although the precise repayment obligation remains disputed.
Community members questioned why the project was shutting down rather than isolating compromised infrastructure, rotating exposed credentials and conducting an independent security review.
Some holders reported substantial investment losses, including individual claims reaching approximately $10,000.
The backlash also focused on the planned treasury liquidation. Selling the remaining project-controlled tokens into an already weakened market could create additional pressure on ZC liquidity during the closing trading window.
Zipcoin previously reached an all-time high near $0.043 on October 4, implying a fully diluted valuation of approximately $43 million.
The token’s value subsequently collapsed, with its market capitalization falling sharply as the security incidents and shutdown announcement damaged investor confidence.
Zipcoin’s planned closure follows other cryptocurrency projects abandoning compromised infrastructure. In August, BounceBit shut down its Layer 1 following a $3 million authorization exploit, although it opted to migrate its token to BNB Chain rather than discontinue its broader operations.
Zipcoin has not announced a replacement token, compensation program or formal recovery arrangement for affected investors.
The team’s immediate plan centers on the six-hour holder exit period and liquidation of approximately 22 million remaining ZC tokens. Whether proceeds will fund any recovery or repayment process has not been disclosed.
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