Arthur Hayes' Maelstrom fund sold its entire Zcash position this week after the Orchard Counterfeiting Vulnerability was patched. The flaw, discovered May 29, 2024, had let attackers create unlimited counterfeit ZEC undetected within the Orchard pool. Hayes' move drops ZEC from his portfolio, ending the 'Holy Trinity' strategy that paired it with NEAR and HYPE.
The Flaw and Fix
The vulnerability came from a soundness failure in Zcash's proof system. It required coordinated network action to disable the Orchard pool while patches were deployed. The Zcash Open Development Lab fixed it by June 2, 2024, but stressed it's cryptographically impossible to prove whether counterfeits were ever created. No evidence of exploitation emerged before the fix.
Market Fallout
ZEC's price plunged over 45% within 24 hours of the vulnerability disclosure. The crash followed Hayes' earlier exits from HYPE and NEAR tokens. His portfolio now holds only Worldcoin (WLD) as its AI-linked asset. The price drop happened fast and hit small traders hardest.
Hayes' Exit Strategy
Hayes has said he'll consider repurchasing ZEC if future developments prove his concerns about the vulnerability were overblown. His fund's exit continues a pattern of abandoning positions after major security incidents. WLD remains his sole bet on AI-themed crypto assets for now. This isn't the first time the fund has dumped a token over technical risks this year.
What's Left Unresolved
The Orchard pool's restoration leaves a permanent question about whether counterfeits entered circulation. Zcash developers can't verify it, leaving investors without answers. Hayes' willingness to reconsider ZEC depends entirely on new evidence about the vulnerability's real-world impact. That evidence may never come.
