Zcash Price Plummets Amid Hackers' Stolen Crypto Shifting Into Shielded Pools
Key Summary
Hackers are shifting millions in stolen crypto into Zcash's shielded pools, which may impact the ZEC price before its upgrade decision, with a major network upgrade vote days away.
Precedent & Market Context
The recent Bitget breach and CryptoBilis Ledger exploit have raised concerns about the security of cryptocurrency exchanges. However, it's worth noting that Zcash's shielded pools offer users a choice between public addresses and shielded pools, which can conceal the sender's and recipient's identities and transaction amounts. This feature has been used by hackers in the past to launder stolen funds.
In the past, a $387.5 million loss from a Bitget breach resulted in 2,746 ZEC being moved into Zcash's Ironwood shielded pool. A similar strategy was used by the CryptoBilis Ledger attacker, who deposited 2,990.3 ETH into the Tornado Cash mixer.
Main Event
Hackers are funneling millions in stolen crypto into Zcash's shielded pools, with ZEC falling 10.8% in a week. The influx of hacked funds may negatively impact ZEC before its upgrade decision, with a major network upgrade vote days away.
Zcash developers meet on October 20 to determine when the NU7 upgrade will be implemented on the main network. The NU7 upgrade targets November 5 but won't resolve shielded-pool compliance concerns.
Analysis & Market Impact
The anti-money-laundering regulations require exchanges to know the source of customer funds, which has led some exchanges to delist privacy coins in the past to avoid regulatory scrutiny. A delisting can drastically reduce a coin's buyer base.
The influx of hacked funds may not affect ZEC immediately, but it could pressure the price more gradually. Hackers who convert stolen funds into Zcash's shielded pools can still be tracked by investigators, but the anonymity offered by the shielded pools makes it harder to identify the individuals involved.
Implications & Outlook
The ZEC price has declined sharply from $1,159 to $1,096 within a single hour, with much of the decline attributed to leverage. However, this selling pressure typically stops once overleveraged traders are eliminated.
The ongoing decline of ZEC over the past month cannot be fully explained by the laundering activity, and the price may continue to decline due to other factors. However, the influx of hacked funds may put additional pressure on the price.
The major network upgrade vote on November 5 will determine when the NU7 upgrade will be implemented on the main network. The upgrade targets November 5 but won't resolve shielded-pool compliance concerns.
Hackers are shifting millions in stolen crypto into Zcash's shielded pools. A delisting of ZEC from exchanges could drastically reduce its buyer base and put additional pressure on the price.
- Zcash
- Bitget
- CryptoBilis Ledger
- North Korean hackers
- Specter
- ZachXBT