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Five Wallets Opened Large ZEC Shorts Before a Vulnerability Was Discovered
Allium analysts identified five large profitable short positions in $ZEC on Hyperliquid, worth more than $72 million in total, opened on 25–26 May — several days before a vulnerability was found in the Orchard pool.
Source: Allium.
The existence of a critical bug became known on 29 May, while the information was disclosed publicly only on 5 June. Amid discussions of the incident, the price of $ZEC collapsed from $685 to a local low of around $250.
According to Allium, trading volume for the coin on Hyperliquid surged as early as 26 May. On that day, peak hourly turnover reached $283 million — roughly 12–13 times higher than the usual level.
Source: Allium.
Additional pressure was created by former BitMEX CEO Arthur Hayes, who reported on 4 July that he had sold his entire position in $ZEC.
The most active hour came on 5 June: during that period, Zcash trading volume on Hyperliquid exceeded $560 million — at a time when the coin’s price was near the bottom.
The vulnerability in Orchard, which had been present in the contract since its launch in May 2022, made it possible to issue an unlimited amount of $ZEC. Because of the hidden nature of Zcash transactions, no one, including the developers, can prove that the bug was not used in practice.
The blockchain team fixed the error through a soft fork and a hard fork.
Allium emphasized that the timing coincidence does not prove early access to information. Wallet data shows trading behaviour, but does not explain motives. At the same time, the report covers only Hyperliquid futures and does not include spot markets on Coinbase, Binance and other centralized exchanges.
As a reminder, the Zcash team approved consensus changes for the Ironwood upgrade. The upgrade is expected to launch a new shielded pool and limit the supply of $ZEC.
See also: "Bitcoin Price Forecast: RSI Reaches 23 as BTC ETFs Return to Pre-Election Levels"
