Arthur Hayes says Maelstrom has sold its entire Zcash position after new revelations about the Orchard Pool’s vulnerability exacerbated the perceived risk around ZEC’s monetary integrity. The move effectively ends his recent ‘Holy Trinity’ trade between ZEC, NEAR and HYPE, while leaving Worldcoin as the AI-linked bet he believes the fund still owns.
“The Holy Trinity is dead,” Hayes said wrote about X. “Unfortunately, due to the Orchard Pool exploit, I had to dump our entire ZEC bag.”
Why is Hayes dumping Zcash now?
The post followed a detailed statement from Zooko Wilcox, Jason McGee and Taylor Hornby, who described the problem as “The Orchard Counterfeiting Vulnerability.” According to their summary, Hornby discovered a critical vulnerability in Zcash’s Orchard pool on May 29 and disclosed it to the Zcash Open Development Lab, which then coordinated an emergency response that was completed on June 2. The bottom line was clear: the vulnerability “could have been exploited to undetectably create an unlimited supply of counterfeit ZEC within Orchard.”
Related reading
That disclosure changed the market framework. Previous ecosystem posts had emphasized that the vulnerability had been fixed, there was no evidence of exploitation, and user funds remained safe. But Wilcox, McGee and Hornby added an important caveat: Due to Orchard’s privacy properties, there is no way to cryptographically prove whether the vulnerability was exploited while it existed. That distinction is at the heart of Hayes’ decision to leave.
“While I think it is extremely unlikely that anything is being minted, it cannot be formally proven cryptographically impossible,” Hayes wrote. “AI, government, and big tech privacy requires perfection, not improbability. I read about the exploit yesterday and didn’t realize how it violated my narrative mental map.”
Josh Swihart, founder and CEO of Zcash Open Development Lab, offered his own explanation in a post titled “Never Again.” He described the Orchard bug as a flaw in one of the system rules: the rule was so loosely written that it could accept false information and still continue. In other words, the problem was not a privacy leak but a lack of soundness in the evidentiary system, the kind of issue that can undermine confidence in whether invalid value creation was possible within a ring-fenced pool.
The stopgap required coordinated network action rather than a simple wallet or application patch. ZODL and the broader Zcash ecosystem have moved to temporarily disable Orchard actions and then restore them with a corrected circuit. The remediation may have closed the vulnerability, but for a privacy asset the reputational damage came from the residual uncertainty: no evidence of counterfeiting is not the same as cryptographic proof that counterfeiting never occurred.
Related reading
Hayes said the roughly 30% selloff in ZEC forced him to reassess the position. “The 30% dump got me thinking, and I had to take profits on the entire position,” he wrote. His logic was not that there was exploitation, but that the privacy thesis he had attached to ZEC required a higher standard than probabilistic reassurance.
The sale completes a quick reversal of Hayes’ May 22 “Holy Trinity” call, when he grouped HYPE, ZEC, and NEAR as a three-token basket. “When you are in position, trading is easy, sit back and watch the numbers rise,” he wrote at the time, calling it “HYPE, ZEC, CLOSE to the holy trinity.”
HYPE represented the on-chain derivatives and protocol revenue trading, NEAR the AI and chain abstraction corner, and ZEC the privacy leg. A day before the ZEC sell-off, Hayes had already said he had dumped his entire HYPE and NEAR positions, citing higher energy prices, looming large AI IPOs and political risks around artificial intelligence as reasons to take profits.
Yet Hayes did not close the door on Zcash. “We will consistently reevaluate our thinking and if my assumptions prove wrong, we will buy again, hopefully at lower prices,” he wrote. “Privacy is priceless and I have no problem eating humble pie and repurchasing at much higher prices.”
For now, Worldcoin is the remaining public expression of its AI-linked rotation. “We still have WLD and are happy to have Lord Elon pumping our bags,” Hayes added. That follows his recent public call for a WLD bull market, linking the move to renewed speculation around AI assets and an OpenAI IPO.
At the time of writing, ZEC had fallen by more than 45% in 24 hours.
Featured image created with DALL.E, chart from TradingView.com