Cypherpunk Technologies (CYPH), a Nasdaq-listed Zcash treasury company, saw its shares fall more than 40% on Friday as investors reacted to the disclosure of a critical bug that was recently patched in the privacy-focused cryptocurrency. The (ZEC) token itself also fell more than 50% during the selloff.
The decline followed the disclosure of a counterfeiting vulnerability in Orchard, Zcash's shielded pool. The bug could have been exploited to undetectably create an unlimited amount of counterfeit ZEC tokens within Orchard, according to a post by Zooko Wilcox-O'Hearn, Zcash co-founder and Shielded Labs head, alongside researchers Jason McGee and Taylor Hornby. The vulnerability was fixed through an emergency network upgrade, and the foundation said there is no evidence it was ever exploited.
Despite the recent developments and market reaction, Cypherpunk remains confident in Zcash's long-term outlook.
"Please stop the FUD," the company wrote in one X post. It also remains committed to its goal of accumulating 5% of Zcash's fixed supply of 21 million tokens. Cypherpunk currently holds 314,185.70 ZEC, representing about 1.88% of the cryptocurrency's circulating supply.
"We are firmly committed to our 5% network accumulation target, as Zcash just demonstrated the institutional-grade security culture that will survive the AI era," Will McEvoy, chief investment officer of Cypherpunk, told The Block.
