ZEC plunges 50% as Orchard pool vulnerability spooks supply…

Zcash (ZEC) shed as much as 50% in 24 hours after Shielded Labs disclosed a four-year-old vulnerability in the token's Orchard privacy pool — a flaw that, if exploited, could have allowed an attacker to mint undetectable counterfeit ZEC. The bug was found last week by security engineer Taylor Hornby using Anthropic's Opus 4.8 model and patched in an emergency fix by June 1. The deeper problem: because of how Orchard's privacy architecture works, there is no cryptographic way to prove whether anyone exploited the flaw before it was closed. Shielded Labs said exploitation was probably unlikely, but it cannot be certain — and that uncertainty now hangs over ZEC's entire supply. Arthur Hayes, CIO of Maelstrom, said he sold his entire ZEC position in response.

Why it matters

The selloff was driven by spot holders, not a leverage cascade. ZEC recorded roughly $118 million in forced liquidations — remarkably small for a token that halved in price, with only about 14% of leveraged positions wiped out. Open interest in ZEC futures simultaneously climbed to a record high in token terms, meaning traders opened fresh short positions into the decline rather than closing existing ones. On Binance, the long/short ratio sat at 0.77 for retail and 0.80 for whale accounts; OKX traders were even more bearish, with retail at 0.67. The structure points to a market that believes the supply-integrity overhang is unresolved.

Market impact

The heavy short positioning creates a double-edged setup. If selling pressure eases and price stabilises, a short squeeze could produce a sharp snapback — ZEC is still up roughly 490% over the past year even after the two-week drawdown, giving shorts meaningful paper profits to protect.