Arthur Hayes says Maelstrom has sold its entire Zcash position after new disclosures about the Orchard Pool vulnerability increased perceived risks around ZEC’s cash safety. The move effectively ends its recent “Holy Trinity” trading across ZEC, NEAR and HYPE, while leaving Worldcoin as the AI-linked bet it says the fund still holds.
“The Holy Trinity is dead,” Hayes books On
Why is Hayes abandoning Zcash now?
The post came after a detailed statement from Zuko Wilcox, Jason McGee, and Taylor Hornby, who described the issue as an “Orchard forgery vulnerability.” According to their summary, Hornby discovered a critical vulnerability in Zcash’s Orchard pool on May 29 and disclosed it to the Zcash Open Development Lab, which then coordinated an emergency response that was completed on June 2. The headline was stark: The vulnerability “could have been exploited to create an unlimited amount of counterfeit ZEC within Orchard.”
Related reading
This revelation changed the market framework. previously Ecosystem messages He stressed that the vulnerability has been addressed, that there is no evidence of exploitation, and that user funds remain safe. But Wilcox, McGee and Hornby Add an important warning: Due to Orchard’s privacy characteristics, there is no way to cryptographically prove whether the vulnerability was exploited while it existed. This distinction is at the heart of Hayes’ decision to come out.
“Although I think it is very unlikely that the coin will ever be minted, its impossibility cannot be formally proven through cryptography,” Hayes wrote. “The privacy afforded by AI, government, and the grand tech narrative demands perfection, not improbability. I read about exploitation day after day, and did not appreciate how it violated my narrative mental map.”
Josh Swihart, founder and CEO of Zcash Open Development Lab, offered his own explanation in a post titled “Never Again.” He described Orchard’s error as a failure of one of the rules of the system: the rule was written loosely enough that it could accept false information and still pass. In other words, the problem was not a privacy leak, but rather a failure in the integrity of the proof system, the kind of problem that can undermine trust if an invalid value can be created within a protected pool.
An emergency fix requires coordinated action on the network rather than a simple patch of the wallet or application. ZODL and the broader Zcash ecosystem moved to temporarily disable Orchard’s actions and then restore them with a patched circuit. The remedy may have closed the vulnerability, but for privacy assets, the reputational damage came from the remaining uncertainty: No proof of counterfeiting is not the same as cryptographic proof that counterfeiting never occurred.
Related reading
Hayes said the roughly 30% sell-off in ZEC forced him to reevaluate the position. “Unloading 30% made me rethink, and I had to take profits on the entire position,” he wrote. His stated reasoning was not that exploitation had occurred, but rather that the privacy thesis he linked to ZEC required a higher standard of probabilistic reassurance.
The sale completes a quick reversal from Hayes May 22 Call of the Holy Trinity.when he grouped HYPE, ZEC, and NEAR into a basket of three symbols. “When you’re in a trading position, trading is easy, sit back and watch the numbers go up,” he wrote at the time, calling “HYPE, ZEC, NEAR the Holy Trinity.”
HYPE represents on-chain derivatives and protocol revenue trading, NEAR represents the AI and on-chain abstraction angle, and ZEC represents the privacy leg. A day before the ZEC sale, Hayes had already said so Dumped him full positions HYPE and NEARciting rising energy prices, major IPOs on the horizon and political risks related to artificial intelligence as reasons to take profits.
However, Hayes has not closed the door on Zcash. “We will continually reevaluate our thinking, and if my assumptions prove incorrect, we will repurchase, hopefully at lower prices,” he wrote. “Privacy is priceless and I have no problem eating humble pie and buying back a much higher amount.”
For now, Worldcoin is the only remaining public expression of its AI spin. “We still carry WLD and are excited to have Lord Elon pumping our bags,” Hayes added. This follows him Final public call for WLD bull marketlinking the move to renewed speculation about AI assets and OpenAI’s initial public offering.
At press time, ZEC has fallen by more than 45% in 24 hours.
Featured image created with DALL.E, a chart from TradingView.com
