The crypto community was blindsided recently by the abrupt shutdown of the social derivatives trading platform ZKX. Asset manager Amber Group has shared its shock and is pushing for more transparency in the industry.
Four days ago, ZKX, which operated on Ethereum’s Starknet layer-2 network, announced it was shutting down. Eduard Jubany Tur, the founder, said the project couldn’t continue due to poor economic prospects.
This announcement took everyone by surprise, especially Amber Group, which had been closely involved with ZKX.
Amber Group played a huge role in ZKX’s market, providing crucial liquidity. They were part of ZKX’s token generation event in June, making sure there was enough liquidity. To do this, they received a loan of 2 million ZKX tokens without any extra fees.
Managing market liquidity and token distribution
Despite the lack of organic buying interest at launch, Amber Group continued buying ZKX tokens to maintain liquidity, even as prices dropped.
On June 24, ZKX’s team asked Amber to return 1 million tokens to reduce the circulating supply and boost community confidence. Amber Group agreed, reducing their loan to 1 million tokens.
In addition, Amber Group bought 2 million ZKX tokens from the open market, bringing their total holdings to 3 million tokens. This effort was part of their strategy to keep the market stable.
The closure of ZKX came just a month after they raised $7.6 million in a funding round on June 19. Investors in this round included Flowdesk, GCR, and DeWhales.
Earlier investors in ZKX included big names like HashKey, Amber Group, Crypto.com, and StarkWare. HashKey expressed their disappointment with how ZKX handled things. They said,
“We faced a lack of transparency and accountability from ZKX in disclosing their financials, fund allocation, and operational plans. Their reluctance to communicate was disappointing, and the founder’s handling of the situation was regrettable.”
HashKey stressed the importance of open communication and accountability in entrepreneurship. They pointed out that without these qualities, founders risk losing trust and future funding opportunities in the industry.
