Investors in the recently-shuttered Starknet-based decentralized exchange ZKX were apparently caught off guard by the protocol’s closure, their X posts indicate.
ZKX’s millions in VC funding, alongside its token generation event which took place just weeks ago, had blockchain sleuth ZachXBT, among others, alleging that the project may constitute a rug pull, while founder Eduard Jubany Tur defended the shutdown, stating the project simply didn’t make economic sense to continue.
“There’s no denying the TGE didn’t meet expectations, and the resulting losses have contributed to our current situation. As major token holders exercise their right to cash out, the token’s value has continued to decline,” Tur stated in his initial announcement post. “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,” Tur wrote in a Telegram announcement message.
However, Tur’s announcement reportedly blindsided even investors and at least one major market maker, who had no advance warning of the shutdown. “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,” ArkStream Capital founding partner Ye Su posted on X. HashKey Capital echoed Su’s concerns in its own post, complaining that ZKX failed to share its financials and future plans with the VC firm.
Amber Group, which describes itself as an investor in and market maker for ZKX, said it holds 3 million ZKX tokens after returning half of its initial 2 million token loan and purchasing 2 million more tokens as part of market making operations since the token generation event. The price of ZKX’s token is down 93.6% since the listing, according to CoinGecko data.
“Due to a lack of organic buying interest upon launch and our commitment to provide consistent liquidity, we have been net buying ZKX tokens since the listing, even as prices declined. This approach aligns with our commitment to support projects and their communities, ensuring stable market conditions, even potentially at our own expense,” Amber Group wrote.
In a follow-up statement posted on August 1, Tur expanded upon the events that led to ZKX’s closure. “For additional context, we processed several investor refunds ahead of TGE, including some investors who have been very vocal on social media this week. We did our best to address the concerns of investors who were uncomfortable with their exposure to the ZKX token before the token launch. This is all documented,” Tur wrote in part. It is unclear which investors in particular were refunded.
“Entrepreneurship inherently involves risks and the potential for failure, making open communication, transparency, and accountability invaluable traits for founders. We hope that founders recognize that a solid reputation is a vital asset in securing future financing,” HashKey Capital wrote.
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