Arthur Hayes Dumps Zcash as Orchard Flaw Shakes Privacy Coin Trust

Highlights:

• Arthur Hayes sold his full ZEC position after Orchard flaw concerns hit confidence.
• ZEC has dropped sharply as traders questioned supply certainty inside the shielded pool.
• Developers patched the bug, but historical supply proof remains unavailable.

Arthur Hayes sold his full Zcash position after a flaw in the Orchard shielded pool shook ZEC confidence Friday. The BitMEX co-founder said the issue broke his “Holy Trinity” privacy thesis, which had included ZEC, HYPE, and NEAR. In a world of fear of AI, governments and Big Tech, privacy assets require certainty, not a probability, he told followers. That made him re-evaluate the trade, although he did not think counterfeiting was likely.

Hayes said the 30% selloff also changed his risk view. Moreover, he added that he could buy ZEC again if later facts challenge his assumptions. However, his exit completed a fast portfolio rotation after he also sold HYPE and NEAR earlier this week.

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

Zcash Bug Hits the Core Privacy Argument

Zcash’s concerns started after security analyst Taylor Hornby found a bug on May 29. Zcash founder Zooko Wilcox later said Hornby used AI-assisted security work to identify the flaw. The issue sat in Orchard, the shielded transaction pool that supports private ZEC transfers.

Developers moved quickly after the discovery. They shipped a security patch by June 1. Reports also pointed to an emergency network fix on June 3. That major concern, however, didn’t disappear. Because Orchard hides transaction details, developers cannot prove nobody used the bug before the fix. That limitation mattered because Zcash depends deeply on trust.

The flaw could have let a crafted transaction pass checks and create fake ZEC inside Orchard. No public evidence shows anyone exploited it. Still, traders reacted to the gap between “unlikely” and “impossible.” For a privacy coin, that small gap carried large market weight.

ZEC fell hard as traders reacted to the move. According to data from CoinMarketCap, the privacy coin has recently dropped from above $600 to the $380 range. Currently, ZEC has declined by more than 40% today following the panic. As volume jumped, long traders took heavy losses, with liquidations nearing $49 million over 24 hours.

Arthur Hayes’ Worldcoin Bet Stays as Portfolio Rotates

The sale also raised questions about Hayes’ wider crypto positioning. His earlier “Holy Trinity” trade linked Hyperliquid, NEAR Protocol, and Zcash to three major themes. Those themes covered tokenized markets, artificial intelligence, and privacy. After this week’s sales, that basket no longer stands.

Hayes didn’t lay off all of his high-risk crypto bets. He said he still holds Worldcoin and remains interested in its possible upside. WLD is trading near $0.50 with a 5% daily decline. Hayes tied the position to possible excitement around a future SpaceX IPO, suggesting that WLD could act as a high-beta proxy if that story gains traction.