ZKX shutdown sparks investor outrage: Amber Group, HashKey respond

As a seasoned crypto investor with scars from the 2017 bull run etched deep into my soul, I can’t help but feel a sense of déjà vu when reading about the ZKX debacle. The lack of transparency and abrupt closure have left a sour taste in many investors’ mouths, myself included.

The unexpected closure of the social derivatives trading platform ZKX, which operates on the Starknet layer-2 network, sparked anger from both investors and market intermediaries.

According to Eduard Jubany Tur, who made the announcement on July 30, the main cause for shutting down the project was its unprofitability. Unfortunately, this sudden decision and poor communication led several involved parties to be taken by surprise.

Amber Group shares perspective

As an analyst, I was taken aback by the abrupt halt in ZKX’s (ZKX) operations, a significant partner for my firm, Amber Group. In a recent post on X, we voiced our disappointment over the lack of information provided by ZKX regarding this unexpected turn of events.

Given the latest events involving ZKX, although we are bound by our contractual confidentiality agreements with our clients that include ZKX, we wish to express our viewpoint and disclose pertinent details, acting as an investor and market maker, to foster transparency and aid the community. In doing so, we…

— Amber Group (@ambergroup_io) August 3, 2024

In the article posted on X, it was disclosed that the company played a role in maintaining liquidity during ZKX’s token sale on June 19. To make this possible, Amber Group obtained a loan consisting of 2 million ZKX tokens, with no extra charges involved.

Amber asserted that they still bought ZKX tokens, even when there was little organic demand for these tokens, primarily to ensure market fluidity, as the prices fell.

On June 24, ZKX asked for a return of 1 million tokens to decrease token circulation and boost community trust. According to Amber Group, they have followed through on this request, thus lowering their loan to only 1 million tokens.

As a crypto investor, I managed to gather a substantial sum of 3 million ZKX tokens even amidst the difficulties. This was achieved not only by holding onto my initial investment but also by strategically purchasing an additional 2 million tokens from the open market. The goal was to ensure consistent liquidity for ZKX, which I believe is crucial in the dynamic world of cryptocurrencies.

As a crypto investor, I’ve taken note of Amber Group’s recent emphasis on the crucial role of transparency in our sector. The silence from ZKX throughout the entire process has raised some red flags and established a worrying precedent that we should all be wary of moving forward.

HashKey decries lack of transparency

Other investors have also echoed sentiments similar to Amber’s. For instance, HashKey Capital has criticized ZKX for its failure to provide transparent financial details and operational plans. 

The investment company shared their thoughts on X, expressing regret over the decline in trust and faith caused by ZKX’s lack of responsiveness and the perceived mismanagement of the issue by Tur.

As a fellow crypto investor, I too share the disappointment and frustration experienced by Ye Su, regarding the sudden halt in operations without prior notice from the ZKX team. Unfortunately, they failed to keep us informed about their financial status or expenditures, leaving us in the dark.

Expressing agreement with the widespread opinion, well-known blockchain analyst ZachXBT openly expressed his thoughts on the ZKX incident, implying that it might have been an exit scam or “rug pull.”

In the face of criticism, Henri, Director of Developer Relations at the Starknet Foundation, advocated for ZKX, stating that their work had positively impacted the ecosystem, and he considered it unjust to brand them as fraudsters.

Henri proposed an alternative perspective, suggesting that ZKX’s sudden shutdown might have been due to unwise decisions instead of the malicious intentions implied by ZachXBT.

ZKX founder offers clarification

Expanding on the conversation, Tur responded thoroughly in a lengthy post, addressing the accusations.

Tur made it clear that all the funds belonging to users, which were under the project’s control earlier, have now been returned. Over 95% of withdrawal requests have already been processed successfully.

As a crypto investor, I too recognized that the ZKX team had understated the operational costs. These costs encompassed not only the maintenance of a layer-3 blockchain but also market-making expenditures. Regrettably, these outlays surpassed the revenue generated, causing some concern.

In simpler terms, Tur explained the financial pressures and attempts to keep cash flowing, pointing out that the total funds raised for the project ($7.6 million over four years) weren’t enough to cover ongoing expenses.

Moreover, the creator of ZKX detailed the hurdles encountered during their token sale, such as scant demand and intense selling pressure, which he attributed to the token’s underperformance.

He underscored their actions were guided by honest intentions, striving for a fair representation of all parties involved, while also investigating various methods to maintain the project’s longevity.

Read More

Sorry. No data so far.

2024-08-04 19:44