Blockchain sleuth ZachXBT alleges that ZKX, a social derivatives trading DEX, raised millions and launched its token despite knowing the risk of shutting down.
Points
- ZKX raised millions in funding despite shutdown risks.
- The project announced closure and refund to users.
- Allegations of misleading investors during the token launch.
- Founders defend their decisions and transparency.
Blockchain sleuth ZachXBT has alleged that ZKX, a gamified social derivatives trading DEX on Starknet and Ethereum, raised millions in funding and launched its governance token despite a risk of shutting down. On Tuesday, ZKX announced it would discontinue the project, delisting all markets, closing positions, and returning funds to users’ trading accounts. Founder Eduard Jubany Tur stated it had been “unable to find an economically viable path for the protocol” amid “minimal” user engagement and a token generation event that “didn’t meet expectations” as holders continued to cash out the “undervalued” asset.
ZKX Fundraising and Token Generation Event
ZKX raised $4.5 million in seed funding in July 2022 from investors including StarkWare, Alameda Research, and HTX. Amber Group and Crypto.com also joined that round, as did Polygon co-founder Sandeep Nailwal and DragonFly Capital General Partner Ashwin Ramachandran. On June 19, the project announced it had raised a total of $7.6 million following a new strategic round from investors including Flowdesk, GCR, and DeWhales, among others, designed to “accelerate the expansion of the ZKX protocol” and introduce new features.
The project’s ZKX governance and staking token went live the same day on KuCoin, Gate.io, and Bitget, alongside an airdrop to reward active community members and early adopters. “This milestone marks the beginning of a transformative year for ZKX and our users,” Eduard Jubany Tur said at the time.
Following the ZKX founder’s closure announcement, ZachXBT posted to X on Wednesday, “Wtf is this rug. 1. Your team announced a raise of $7.6M just a few weeks ago. 2. TGE for ZKX was only a few weeks ago.”
Founders’ Defense and Community Reactions
In response, Eduard Jubany Tur said the funds were raised from 2021 to 2024 to support a team of 30 people building a dedicated blockchain for scaling perps, including multiple code audits and other expenses, and that all user funds had been returned with over 80% of users already withdrawing from the protocol to self-custody. “Core founders didn’t sell a single token from their allocations and unfortunately have seen four years of work and their lives evaporated,” he added. “In hindsight, choosing to run a fully on-chain smart contract protocol instead of an L3 and other strategic decisions would have been wiser financially. We have learned it the hard way.”
“You left out all the people you baited into buying your scam token at TGE with the funding announcement right before shutting down shortly after,” ZachXBT said. “All of what you just shared did not happen between TGE and today.”
Similar complaints of the project’s “rugpull” emerged from other community members, posting direct messages with the project’s team alleging it was “hiding key facts” in the period between announcing the latest fundraising and token launch and the platform’s shutdown. “Pre-announcing the closure would have been a security risk since people could withdraw from the order books and someone could have exploited and put every customer’s funds at risk,” Eduard Jubany Tur appeared to write in one of the messages. “We wanted to make sure customer’s funds were safe until we delisted and closed all markets. We couldn’t risk exploits; we had to be responsible for the customer’s funds.”
However, Bru Finance founder Ashish Anand suggested that $2.5 million per year of burn rate was “not a big sum in crypto” and that it’s possible the token sale was the project’s “only hope to raise money as well as give exit to investors and that did not go well.”
“ZKX launched a token, announced an old raise/did KOL marketing and decided to shut down the project six weeks after TGE. That is a rug under any context,” ZachXBT replied. “The team knowingly misled the community/retail into buying a token by giving the appearance the project was healthy and strong when in reality they were in a bad position and about to shut down,” the blockchain sleuth added. “All of the issues now raised by the team did not happen after TGE. It is retail/community who are the victims of this incompetence.”
ZKX is currently trading for $0.01, down 19% over the last 24 hours and 74% during the past week, according to CoinGecko data.
The Block
ZKX/USD price chart. Image: CoinGecko.
ZKX and Eduard Jubany Tur did not immediately respond to The Block’s request for comment.
Headline and content have been updated for clarity.
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解説
- Allegations of misleading investors during the token launch can damage a project’s reputation.
- Transparency and communication are crucial for maintaining investor trust.
- The rapid shutdown after fundraising raises questions about the project’s management and decision-making process.