Grayscale Chairman Defends Zcash As ZEC Plunges 44% After Orchard Flaw

Grayscale Chairman Barry Silbert is defending Zcash after the Orchard vulnerability triggered a violent ZEC selloff, with the coin down about 44% from the previous close and briefly falling more than 53% from its intraday high.

Silbert pushed back against critics, arguing that Zcash’s response should be seen as a sign of developer strength rather than network failure. He praised the rapid discovery and fix, framing the episode as an early test of how privacy-focused blockchains will handle an AI-assisted security era.

“The AI-enabled assault on blockchains is here,” Silbert wrote, adding that he is “proudly on Team Zcash.”

The defense comes as ZEC trades near the low-$300 area after touching an intraday low near $262. The collapse turned the Orchard flaw from a technical security event into a full market-confidence crisis, especially after Arthur Hayes sold his entire ZEC position and large holders absorbed heavy unrealized losses.

Zcash Fixes Orchard, But Market Confidence Breaks

The Orchard issue was discovered on May 29 by Taylor Hornby during Zcash protocol security work. The flaw affected the Orchard zero-knowledge proof circuit, creating a soundness vulnerability in the network’s newest shielded pool.

Zcash disabled Orchard actions through an emergency soft fork before restoring normal operations through the NU6.2 upgrade at block 3,364,600 on June 3. The upgrade re-enabled Orchard with a corrected circuit, while Zcash’s turnstile mechanism confirmed that the broader supply cap remained intact. No confirmed exploitation, unauthorized value creation or privacy break has been reported.

That is the side Silbert is defending. The bug was found, confirmed, contained and patched within days. Supporters see the response as proof that Zcash’s security process worked under pressure, especially because the vulnerability was found through AI-assisted research before any known malicious exploitation.

The market is focused on the harder part. The Orchard counterfeiting vulnerability created a confidence gap because prior exploitation cannot be cryptographically ruled out from Orchard alone due to the pool’s privacy properties. Shielded Labs described prior exploitation as unlikely, but also outlined a possible future upgrade to prove supply integrity more directly.

Hayes Exit Deepens The ZEC Selloff

Arthur Hayes took the opposite side of the market reaction. He said the “Holy Trinity” trade was dead after selling his entire ZEC position, arguing that privacy money needs mathematical confidence rather than probability.

The Hayes reversal hit sentiment because ZEC had recently become one of his high-conviction privacy trades. The selloff accelerated after Hayes exited his ZEC bag and removed Zcash from the privacy pillar of his earlier thesis.

ZEC’s collapse has since moved beyond one high-profile sale. The AI-assisted Orchard fix became a broader test of whether privacy, supply assurance and investor confidence can survive the same event. The earlier Zcash update detailed how ZEC dumped after the Orchard flaw was patched, but live prices have since worsened, with the drawdown stretching from roughly 35% to about 44% from the previous close and briefly more than 53% intraday.

Arkham later flagged how quickly the crash hit large holders, including one ZEC whale down about $70 million in a day without selling. That distinction matters because the whale loss was unrealized, but it showed how much paper wealth disappeared as liquidity broke and confidence weakened.

Privacy Coins Face An AI-Era Stress Test

The split between Silbert and Hayes captures the core Zcash debate.

Silbert sees a network that found and fixed a critical flaw quickly, with no verified exploit and no confirmed unauthorized value creation. Hayes sees a privacy asset whose core pitch depends on stronger assurance than “unlikely.” Both positions are reacting to the same technical reality: shielded privacy protects users, but it can also make historical certainty harder after a flaw in the shielded pool.

That is why the ZEC selloff has been so severe. Privacy coins are not valued only on fees, users or exchange listings. They trade on trust in cryptography, monetary integrity and the belief that private money can withstand surveillance, regulation and now AI-assisted attack research.