Crypto project ZKX faces backlash after sudden closure

A decentralized derivatives protocol, ZKX, suddenly ceased operations, leaving investors and market makers in the dark. The project’s unexpected closure has drawn sharp criticism from key players in the crypto industry.

According to statements released on Aug. 4, Amber group called out ZKX for its lack of transparency and communication. The project team reportedly claimed they ran out of money but refused to provide any financial details or engage in discussions with stakeholders.

In light of recent developments with ZKX, while we honor our contractual confidential obligations with our clients including ZKX, we’d like to share our perspective and necessary information as an investor and market maker to promote transparency and support the community. We… https://t.co/Erx038azsH
— Amber Group (@ambergroup_io) August 3, 2024

Amber Group, which served as a market maker for ZKX’s token generation event (TGE), shared its perspective on the situation. The firm revealed that it was given a 2 million ZKX token loan to provide liquidity at launch on June 19. Despite declining prices and a lack of organic buying interest, Amber continued to support the market, accumulating a net 2 million ZKX tokens.

Questions arise about ZKX financial management

On June 24, ZKX made a formal request to have 1 million tokens returned in order to bolster community trust. Amber complied by reducing its outstanding loan by the same amount. Nonetheless, the unexpected decision to shut down the project was announced on July 30, catching everyone off guard.

HashKey Capital raised similar concerns on X, pointing out ZKX’s hesitance to share financial details and future strategies. The investment firm disapproved of ZKX founder Eduard Jubany’s management of the issue, underscoring the significance of transparent communication and responsibility in business.

Much like other investors, we experienced a lack of transparency and accountability from @zkxprotocol in disclosing their financials, allocation of funds and operational plans.

Additionally, their reluctance to communicate was disappointing, and the manner in which the founder… https://t.co/4EyaUdEp06
— HashKey Capital (@HashKey_Capital) August 2, 2024

The abrupt shutdown of ZKX has sparked inquiries into the project’s financial oversight and decision-making procedures, shedding light on the hazards linked to fledgling crypto ventures and highlighting the critical need for increased transparency within the sector.

This occurrence stands as a gentle warning for investors and community members to be vigilant and conduct thorough research before getting involved with new cryptocurrency projects. It also sheds light on the persistent difficulties in upholding trust and responsibility within the swiftly changing blockchain environment.