Investors and Market Maker Caught Off Guard by ZKX Closure

The closure of the ZKX protocol on StarkNet left investors and a market maker criticizing the project’s management, accusing the leadership of secrecy.

When ZKX shut down, as investors, we got zero heads-up. The team claimed they ran out of money, refused to provide any financial or spending details, and wouldn’t communicate with us.

ZKX founder Edward Jubany Tur said in Telegram: “We are under no legal obligation to provide… https://t.co/ESa1SzxpIb

— Ye Su (@allen_su1024) August 1, 2024

“When ZKX closed, we, as investors, received no warnings. The team stated they ran out of money, refused to provide any financial or spending data, and did not want to communicate with us,” wrote Ye Su, a founding partner of venture firm ArkStream Capital.

According to him, ZKX founder Edward Jubany Tur stated in private correspondence that he was not obliged to provide information on expenses, and the funds currently being used “are not from investors.”

In the closure announcement, the protocol’s co-founder cited economic difficulties and low community engagement.

“[The project leader] took money from early supporters without any communication, showing no moral standards and losing his right to future business in the industry,” added Su.

HashKey, as an investor, also faced “a lack of transparency and accountability” from ZKX regarding financial disclosure, fund allocation, and operational plans.

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 market maker and project investor Amber Group reported that it still holds about 3 million native ZKX tokens after returning half of its initial loan of 2 million coins and purchasing another 2 million as part of MM operations.

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

“Due to the lack of organic buying interest post-launch and our commitment to providing constant liquidity, we have been net buyers of ZKX tokens since listing, even as prices declined. This approach aligns with our commitment to supporting projects and their communities by ensuring stable market conditions, even potentially at our expense,” wrote Amber Group.

Company representatives clarified that after the closure announcement, the ZKX team no longer contacted them. The decision itself was also made without prior notice.

In June, the Yield App platform ceased operations after “realizing” losses incurred from the FTX collapse.