In less than a month, ZEC surged over 150%, entering the top ten by market capitalization. Its privacy coin characteristics gained attention, but old controversies resurfaced, including ongoing cuts, non-default privacy, governance turmoil, and security vulnerabilities.

Written by: Conflux

In less than a month, ZEC rose from around $486 in mid-August to $1,200, an increase of over 150%. ZEC is an old asset launched in 2016, with code developed based on Bitcoin's, and a maximum supply capped at 21 million coins. The biggest difference is the introduction of privacy transactions based on zero-knowledge proofs (shielded transaction), which can hide the sender, receiver, and amount in a transaction. This is also the origin of its identity as a "privacy coin." This round of rise has propelled it into the top ten in terms of market capitalization.

Old Grievances of Two Veterans

As the price surged, two segments of old grievances related to Zcash were simultaneously unearthed. Wang Chun, co-founder of F2Pool, stated on X that six years ago, after the other party could not even identify the time zone, he directly blacklisted the entire team and claimed this decision is still one of his "most correct decisions." The co-founder of the crypto custody platform Cobo and mining pool F2Pool, "Shen Yu," also shared his story: on the night of the mainnet launch in 2016, after he had just mined a bit of ZEC, the transformer at his home mining facility was struck by lightning, leaving him with a lasting shadow, and ZEC has not appeared in his personal wallet since.

The price and the backlash almost rose in sync.

Revisiting old accounts was just the beginning. Half an hour later, Wang Chun posted a longer tweet, breaking down his dissatisfaction with Zcash into four more specific arguments—covering everything from the startup mechanism to recent security incidents, itemizing them one by one.

Withdrawal Has Never Stopped

Wang Chun's first argument is: a coin that directly writes self-enrichment terms into the block rewards should not be packaged as a "clean," neutral currency. This refers to the design after Zcash's mainnet launch—Bitcoin's block rewards only go to miners, while Zcash does not follow this. In the first four years after the mainnet launch, 20% of each block reward was allocated as "founder's rewards," distributed to founders, employees, advisors, and early investors, totaling about 2.1 million ZEC over four years, accounting for 10% of the total supply cap of 21 million. According to the initial design, this cut was only to be distributed for four years, ending in 2020—after which Zcash would transition to a "clean" asset like Bitcoin: all block rewards would go to miners, with no team or institution able to take a cut from new supplies.

However, when the cut truly ended in 2020, the community voted to pass ZIP 1014, extending the same 20% block subsidy under the name of a "development fund," continuing this distribution until 2024 to Bootstrap, the Zcash Foundation, and several large funding programs. The mechanism of allocating 20% from block subsidies to non-miners did not fully disappear with the end of the "founder's reward"—the name changed, the distribution recipients changed, but the fact that "20% must be taken from each block before miners receive anything" has never truly ended for Zcash.

Privacy Is Not the Default

The most notable technology of Zcash is zero-knowledge proof, which theoretically can completely hide transaction details. However, the protocol itself does not enforce privacy—users can freely choose between shielded (private) addresses or transparent addresses, and some wallets and exchanges still only support transparent addresses for compatibility reasons. Zcash's official team also admits that to truly achieve transaction privacy, users need to actively select services that default to enabling shielded transactions.

This means that Zcash's privacy capability does not equate to all circulating ZEC being inherently in a private state. "Optional privacy" and "default privacy" are two different things; the former is more like a feature toggle, while the latter represents a protocol commitment—and what Zcash has provided over the past decade has always been the former.

Team's Collective Exit

In January 2026, the team responsible for Zcash's core development, the Electric Coin Company (ECC), collectively resigned. The ECC stated this was due to significant disagreements with the governance entity, the Bootstrap board, forcing their exit; Bootstrap attributed the conflict to governance arrangements and legal constraints on non-profit organizations. Two months later, both parties reached an agreement, and ECC gradually ceased operations, transferring technical assets to a newly established team, while the project itself did not come to a halt.

The turmoil has subsided, but the fact that a development organization controlling core technical assets could reach the point of a collective resignation from the Bootstrap board within the ECC-affiliated governance system indicates that this governance structure is still far from "mature."

Security Vulnerabilities

On May 29, security researcher Taylor Hornby discovered a latent defect in the zero-knowledge proof circuit of the Orchard privacy pool, which theoretically could allow individuals to create fake ZEC without leaving on-chain traces. The team promptly initiated an emergency fix: transactions related to Orchard were temporarily halted on June 2, and restored through NU6.2 on June 3; during this period, ZEC also rebounded from $544 to $624. However, on June 5, notable investor Arthur Hayes publicly announced he had cleared all his ZEC positions, citing a straightforward reason: even if the circuit has been repaired, there is no cryptographic method to prove whether anyone had secretly issued fake coins using this vulnerability over the last four years—"fixing" and "proving it hasn't been exploited" are two different matters. Subsequently, ZEC quickly dropped, falling to around $309, nearly halving.

This precisely undermined the most fundamental narrative of Zcash: its total supply is also capped at 21 million, and it has been packaged as "a more thorough digital hard currency than Bitcoin"—but each issuance of Bitcoin is recorded on a public ledger, allowing anyone to verify the total amount; Zcash has obscured part of this ledger for privacy, resulting in no one being able to prove whether the actual circulating amount of this "hard currency" over the past four years is truly still locked within the capped 21 million.

Long and Short Collision

The bearish side has both arguments and genuine financial bets: Wang Chun believes that entering the top ten by market capitalization does not mean ZEC deserves to stand alongside Solana and Hyperliquid, and this surge is "purely narrative-driven"; Garrett Jin, known as the "insider whale agent of 1011," expressed the same attitude through his positions—by September 8, he still held about 39,760 ZEC in short positions on Hyperliquid, with a nominal value of about $45 million and an average entry price of $576.3, even with a paper loss of $22.2 million, he continued to increase his bet.

The bullish side is not merely making claims: the U.S. Securities and Exchange Commission (SEC) ended a multi-year investigation into the Zcash Foundation in January 2026, taking no enforcement action, and removing longstanding compliance concerns hanging over the organization; Grayscale estimated that if ZEC's market capitalization reaches 2%, 5%, or 10% of Bitcoin's, corresponding prices would be $1,622, $4,054, and $8,109, respectively; as of August 29, ZEC's market capitalization was $13.74 billion, accounting for only 0.88% of Bitcoin, indicating that theoretical space still exists. The listing of ETF also allows traditional funds for the first time to hold ZEC without having to manage wallets and private keys.

Both sides are not arguing about the same matter: one side is calculating "how much market share privacy assets can occupy," while the other is calculating "whether this team and mechanism deserve this share."

The Accounts Are Not Yet Settled

Having risen from $309 to over $1,200, ZEC has gone through a severe revaluation. However, this round of increase did not change its historical issues—the controversy over the distribution mechanism, the product paradox of optional privacy, the old tales of governance infighting, and the trust gap from the Orchard vulnerability, none of which have disappeared due to the price increase, nor have they been truly resolved.

The game regarding what supports ZEC's current price has not yet ended.

True testing will not be whether ZEC can reach a new high, but whether the market is willing to support it at today's price once the shorts are no longer forced to cover losses and profit-taking begins.

If it cannot be supported, then this round of surging may only leave behind another re-heated old asset; if it can be supported, then Zcash would have truly passed this crucial test.

Only then might we know whether the money flowing in today is buying a segment of the future of a privacy asset or a sufficiently successful old story.

* This content is for reference only and does not constitute any investment advice. The market carries risks; invest with caution.