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Home»ADOPTION NEWS»ZKX Investors, Market Manipulators Say They Were Hit Hard by Sudden Shutdown
ADOPTION NEWS

ZKX Investors, Market Manipulators Say They Were Hit Hard by Sudden Shutdown

By Crypto FlexsAugust 3, 20243 Mins Read
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ZKX Investors, Market Manipulators Say They Were Hit Hard by Sudden Shutdown
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Investors in the recently shut down Starknet-based decentralized exchange ZKX appear to have been hit hard by the protocol’s closure, according to a post from X.

As ZKX raised millions of dollars in VC funding and held its token generation event a few weeks ago, some, including blockchain expert ZachXBT, claimed the project could amount to a scam, while founder Edouard Juvani Tour defended its closure, saying it did not make economic sense to continue the project.

“There is no denying that TGE did not live up to expectations, and the resulting losses have contributed to the current situation. As major token holders exercised their cash-out rights, the value of the token continued to decline,” Tur said in his initial announcement post. “Announcing the closure in advance would have been a security risk as people could have withdrawn from the order book and someone could have exploited it, putting all customers’ funds at risk,” Tur wrote in his Telegram announcement message.

But Tur’s announcement came as a surprise to investors and at least one major market maker, who were not given advance warning of the shutdown. “When ZKX shut down, we as investors had no advance notice. The team claimed they ran out of money, refused to provide us with financial or spending details, and did not communicate with us,” Ye Su, a founding partner at ArkStream Capital, wrote on X. HashKey Capital echoed Su’s concerns in its own post, complaining that ZKX had not shared financials and future plans with VC firms.

Amber Group, a self-proclaimed investor and market maker for ZKX, said it now holds 3 million ZKX tokens after returning half of the initial 2 million token loan and purchasing 2 million more tokens as part of its market making operations following the token generation event. According to CoinGecko data, the price of ZKX tokens has fallen 93.6% since the listing.

“Due to the lack of organic buying interest at launch and our commitment to providing consistent liquidity, we have been net buyers of ZKX tokens since listing, despite the price decline. This approach is consistent with our commitment to supporting the project and community, while ensuring stable market conditions, potentially at our own expense,” Amber Group wrote.

In a follow-up statement posted on August 1, Tur elaborated on the events that led to the closure of ZKX. “For additional context, we processed multiple investor refunds prior to the TGE, including some who have been very vocal on social media this week. We have done our best to address the concerns of investors who were uncomfortable with their exposure to ZKX tokens prior to the token launch. This is fully documented,” Tur wrote in part. It’s unclear which investors in particular were refunded.

“Starting a business is inherently risky and prone to failure, so open communication, transparency, and accountability are invaluable traits for founders. We hope founders will recognize that a solid reputation is a critical asset in securing future funding,” HashKey Capital wrote.


Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information on the cryptocurrency industry. Below are the current financial disclosures.

© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.

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