Zcash just plummeted 20% after its entire team walked out, exposing a boardroom battle over the project’s assets
Zcash (ZEC) suffered the steepest decline amongst top-tier digital assets on Jan. 8, plunging roughly 20% amid a collision of governance turmoil and a leverage-driven market flush.
According to CryptoSlate data, Zcash fell to a month-low of $382, making it the day’s greatest loser on the Top 100 leaderboard.
This value efficiency decoupled violently from the broader crypto markets, the place digital assets like Bitcoin and Ethereum had registered muted losses throughout the reporting interval.
The catalyst for the rout was the abrupt exit of the entire Electric Coin Company (ECC) team, the group traditionally answerable for Zcash’s core development, following a breakdown in negotiations with the protocol’s overseeing nonprofit board.
The Zcash governance dispute
The selloff started in earnest after Josh Swihart, the former CEO of Electric Coin Company, introduced the team’s collective departure on the social media platform X.
Swihart stated the team had been “constructively discharged” by the Bootstrap board, a 501(c)(3) nonprofit created to help Zcash by governing ECC.
Swihart particularly named board members Zaki Manian, Christina Garman, Alan Fairless, and Michelle Lai, collectively known as “ZCAM,” alleging that they had moved into “clear misalignment” with the project’s mission.
According to him:
“The phrases of our employment have been modified in ways in which made it inconceivable for us to carry out our duties successfully and with integrity.”
He added that the team intends to discovered a new firm to proceed their work, asserting that the transfer was mandatory to guard their efforts from “malicious governance actions.”
However, the Bootstrap board issued a rebuttal framing the battle not as a malicious purge, however as a mandatory protection of nonprofit fiduciary requirements.
In a assertion, the board expressed unhappiness at the team’s departure however clarified that the dispute centered on a proposal to denationalise “Zashi,” a product inside the ecosystem.
Bootstrap famous that, whereas it explored exterior funding to denationalise Zashi, it was certain by strict authorized obligations governing the switch of charitable assets and mental property.
The board drew a direct parallel to the corporate governance struggles at OpenAI, warning that restructuring a nonprofit’s assets for personal profit invitations regulatory peril.
They stated:
“OpenAI’s restructuring drew intense scrutiny from attorneys normal, former staff, and public curiosity teams over considerations about conflicts of curiosity and truthful valuation of charitable assets.”
The board argued that the proposed transaction, in its ultimate state, launched vulnerabilities for politically motivated assaults on Zcash.
“Any of its donors might sue. The transaction might be unwound,” the board said, including that “good intentions don’t fulfill authorized necessities, and urgency doesn’t excuse a flawed course of.”
Despite the friction, Zcash founder Zooko Wilcox-O’Hearn tried to calm market fears concerning the protocol’s security. He mentioned:
“The Zcash community is open supply, permissionless, safe, and personal, and nothing that occurs on this battle can change that.”
He additionally vouched for the integrity of the board members concerned, noting he had labored with Fairless, Manian, and Garman for over a decade.
The leverage flush
While the governance information offered the spark, market information suggests the depth of the crash was exacerbated by an overheated derivatives market.
According to CoinGlass data, the market was primed for a squeeze. Zcash noticed roughly $4.4 billion in futures quantity over 24 hours in comparison with just over $1.1 billion in spot quantity. With open curiosity near $900 million and roughly $23 million in liquidations, the market entered a mechanical suggestions loop.
As costs dropped amid governance headlines, leveraged positions have been liquidated, forcing market sellers into a spot e book that lacked the depth to soak up them.
This dynamic widened spreads and pushed costs by means of key help ranges, leading to an “air pocket” drop quite than a gradual repricing.
The transfer was additional difficult by a “narrative whiplash” concerning Zcash’s provide dynamics.
Throughout 2025, a bullish thesis had fashioned round the “scarcity-by-shielding” narrative, as shielded holdings grew to roughly 4.9 million ZEC, or 30% of provide, based on Grayscale.
However, reporting earlier this week indicated a reversal of that pattern.
Data confirmed that in the first week of January, greater than 200,000 ZEC, roughly 1.2% of the circulating provide, was withdrawn from shielded swimming pools.
Markets typically interpret such “unshielding” as a precursor to promoting, since most exchange-based buying and selling is clear. This pre-existing provide nervousness made the market extremely delicate to the governance shock.
What’s subsequent for ZEC?
Market members are actually weighing whether or not this rupture represents a momentary reset or a everlasting impairment of the project’s credibility.
Some outstanding voices in the group stay aggressively bullish. Mert Mumtaz, a well-known crypto commentator, described the ECC team’s exit as a optimistic unlocking of worth.
“Extremely bullish Zcash’s most competent… now unburdened by the crippling inefficiencies of basis politics,” Mumtaz said, reaffirming a long-term value goal of $10,000 and including, “The cash is definitely gonna be encrypted.”
Sean Bowe, a developer inside the Zcash ecosystem, additionally shared this bullishness, saying:
“I’m actually excited that the legendary team at ECC is regrouping below a new construction, in order that they’ll proceed to construct for Zcash with out the shackles of Bootstrap’s damaged and misaligned nonprofit company construction. The potential unlock right here is big.”
These people’ place aligns with the privateness meta that has gripped the crypto market in current instances.
Notably, venture capital firm a16z, in its projections for the new yr, has argued that privateness will likely be the most necessary moat in crypto.
This view can also be shared by asset administration agency Grayscale, which stated that:
“If public blockchains are going to be extra deeply built-in into the monetary system, they are going to want rather more sturdy privateness infrastructure — and that is turning into apparent now that regulation is facilitating that integration (through market construction laws).”
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