The team behind Polyhedra Network recently announced several key factors that may have led to an 83% price drop of its ZKJ token on Sunday.

In a statement released on Monday on platform X, Polyhedra identified five main reasons that caused the price of Polyhedra Network (ZKJ) to plummet from $1.92 to $0.32 in just a few hours—a decline of over 80%. The blockchain project stated, "This event stemmed from a coordinated on-chain liquidity attack that resulted in a large number of token deposits, Wintermute's massive deposits to centralized exchanges, and the subsequent chain liquidation effect on exchanges."

Polyhedra pointed out that multiple wallets "collaboratively executed a liquidity attack with clear malicious intent," targeting the ZKJ/KOGE liquidity pool on PancakeSwap for withdrawal operations, followed by "aggressive ZKJ sell-offs." The liquidity of the affected trading pair was already weak and imbalanced, leading to selling pressure quickly spreading to the main USDT liquidity pool for ZKJ.

According to Polyhedra's analysis, an address associated with Wintermute transferred over 3.39 million ZKJ tokens to centralized exchanges "within an hour before and after the price crash," while the address also deposited a similar amount of tokens to "on-chain marked exchange deposit addresses and other addresses."

"Preliminary investigation results indicate that Wintermute conducted a large number of token transfers during extreme market volatility, while there were coordinated withdrawals of liquidity from the PancakeSwap ZKJ/KOGE pool," Polyhedra noted in the statement, adding:

"We suspect that […] these addresses collaboratively executed a liquidity attack with clear malicious intent. These actions removed critical market depth, especially in a liquidity pool that was already weak and highly concentrated."

The ZKJ price crash on Sunday instantly evaporated about $500 million in market value. This token, which had been trading steadily around $2 since December 2024, was priced at only $0.39 at the time of publication.

Polyhedra initially attributed the price drop to "a series of abnormal on-chain transactions" occurring in the ZKJ/KOGE trading pair. The project's co-founder, Tiancheng Xie, bluntly stated after the incident report that KOGE "has harmed us all."

KOGE is the governance token of the BNB48 Club within the Binance ecosystem. An account on Binance Square, suspected to be associated with KOGE team members, stated that no members of the team "sold" tokens or participated in actions that led to the price drop.

48ClubIan openly stated in a translated statement on Binance Square on Monday: "After shifting the blame to $KOGE and Wintermute, only your air project pretends to be innocent."

Related: Fairmint Proposes to SEC: A Blockchain Regulatory Framework for Private Markets

Original article: “Polyhedra Claims Liquidity Attacks and Wintermute Deposits are the Reasons for ZKJ Price Drop”

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