The sudden closure of ZKX, a social derivatives trading platform on the Starknet layer-2 network, has caused an uproar among investors and market makers. Founder Eduard Jubany Tur cited economic infeasibility as the reason for the shutdown, leaving many stakeholders surprised and frustrated.
Amber Group, a significant market maker for ZKX, expressed shock at the sudden termination of the platform’s activities. In a post on X, the company revealed its involvement in ensuring liquidity for ZKX’s token generation event on June 19. Despite facing challenges like declining prices and lack of buying interest, Amber Group continued to purchase ZKX tokens to maintain liquidity.
However, ZKX requested the return of 1 million tokens on June 24 to reduce circulation, and Amber Group complied, reducing its loan to 1 million tokens. By the time of the shutdown announcement, Amber had accumulated a total of 3 million ZKX tokens after acquiring an additional 2 million from the open market.
Other investors, such as HashKey Capital and Ye Su, have also criticized ZKX for the lack of transparency in financial details and operational plans. The failure to communicate effectively and handle the situation properly has led to a loss of trust and confidence among investors.
Renowned blockchain investigator ZachXBT labeled the situation as a rug pull, suggesting ill intent on the part of ZKX. However, Henri from the Starknet Foundation defended ZKX, stating that the closure was due to poor decision-making rather than intentional deception.
In response to the allegations, ZKX founder Eduard Tur clarified that all user funds had been returned, with over 95% of withdrawals completed. He admitted to underestimating operational costs, which led to financial strains exceeding revenue. The project’s fundraising efforts over four years were not enough to sustain operations, especially given the low demand and selling pressure during the token-generating event.
Tur emphasized that the team acted in good faith and explored various options to sustain the project, balancing the interests of all stakeholders. Despite the challenges faced, ZKX’s closure was attributed to financial constraints rather than malicious intent.
Overall, the closure of ZKX has sparked outrage among investors and market makers, highlighting the importance of transparency, communication, and financial prudence in the cryptocurrency industry. It serves as a cautionary tale for projects operating in this space, underscoring the need for clear operational plans and effective risk management strategies to prevent similar incidents in the future.