The privacy-focused cryptocurrency Zcash (ZEC) has proven to be one of the underperforming digital assets in the market today.
The altcoin has dropped over 30% in the last 24 hours, hitting an intraday low of $385.8 during early trading in Asia.
Why is the price of Zcash tanking?
The latest dip has brought ZEC down to its lowest level since the start of May. While the entire crypto market was plunging into the red, Zcash's double-digit drop was exacerbated by a major development that intensified selling pressure.
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BeInCrypto reported earlier this week that the team deployed an emergency update to fix a critical bug in the Orchard shielded pool, an initiative that initially drove the price up. This sentiment has since reversed.
In a post published on X, Zcash founder Zooko Wilcox detailed the aspects. He stated that Taylor Hornby discovered the counterfeiting vulnerability on May 29, 2026, by running a custom audit framework combined with the recently released Opus 4.8 model.
Wilcox added that even after the patch was applied, Shielded Labs believed it was important to communicate more context to users.
The exploit went unnoticed in Orchard since the pool launched in May 2022, and the engineers only patched it on June 2. Shielded Labs indicates that exploitation before the fix seems unlikely, even though they can't prove it cryptographically.
"What makes the situation particularly delicate is that due to Orchard's privacy properties and the nature of the bug, there is no definitive way, based solely on cryptography, to determine if an exploit occurred before the vulnerability was discovered and patched. We feel it's important to be transparent about this uncertainty," reads the post.
btw this isn’t the first time a bug like this was discovered in zcash. last time it was disclosed after being a year+ in the wild and everyone lost faith and zcash went to zero for 7 years, until they found a new generation of buyers who doesn’t know the history (that’s you)
— Udi Wertheimer (@udiWertheimer) June 4, 2026
Shielded Labs is now exploring a network upgrade so that everyone can verify the ZEC supply. The plan would involve adding a new shielded pool and enforcing accounting by turnstile for any coins leaving Orchard.
Nevertheless, this episode has highlighted an uncomfortable tension at the heart of Zcash. The same privacy that defines the network also makes its supply difficult to audit.
"Privacy is becoming a bug rather than a feature," wrote one analyst.
The concern has also affected major investors. Investor Arthur Hayes announced he liquidated his entire position following the disclosure.
The Holy Trinity is dead. Sadly due to the Orchard Pool exploit, I had to dump our entire $ZEC bag. – While I think it's extremely unlikely of any minting, it cannot be formally cryptographically proved impossible – The privacy from AI, govt, big tech narrative demands perfection…
— Arthur Hayes (@CryptoHayes) June 5, 2026
Shielded Labs promised a detailed upgrade proposal for next week, although any proof-of-supply mechanism will still need to be validated by Zcash governance. The coming days will reveal if a cryptographic guarantee will be enough to restore the trust shaken by this disclosure.
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