Original author: Jin Kang, Crypto KOL
Original translation: Felix, PANews
On July 30, the derivatives DEX ZKX announced that it would stop operating, saying that it could not find an economically viable protocol path. However, some community users questioned the suspension of operations. More than a month ago, it announced that it had raised $7.6 million, and the TGE was suspended just a few weeks after it started, which seemed unreasonable.
Founder Eduard responded on the X platform that the previous $7.6 million in financing was raised from 2021 to 2024 to support a team of 30 people to build a dedicated blockchain for expansion perps, including multiple code audits with Nethermind, TGE listing costs, etc. All user funds have been refunded and more than 80% of users have withdrawn from the agreement. The core founders did not sell any of their allocated tokens.
However, this response did not "shut up the public", and crypto KOL Jin Kang broke the news on the X platform today, questioning the team's opacity and other issues, and publicly disclosed the dialogue with the ZKX team, hoping that investors would speak out and asking relevant market makers and CEX to give explanations. The following is the content details.
If this isn't a scam, then what is it?
The team closed 6 weeks after the TGE due to "unable to find an economically viable agreement path"
Ownership of tokens changed in TGE
Circulation increased at TGE (relative to whitepaper), causing price to plummet
After the ZKX TGE, the price dropped by over 50% in the first 24 hours.
The team explained that market makers such as Amber Group, Flowdesk, and IMC were unable to stabilize the price at $0.7 because a small number of users were selling.
They say they are waiting for funding from the Starknet team to address the issue.
The team mentioned that they are working with the Berachain team on a potential migration and hinted that they could spend $1 million if necessary, but they would be happy to do a bootstrapped launch regardless.
But within 6 weeks, they announced they were ceasing operations of the project.
The ZKX team concealed key facts and blamed the price crash on market makers:
Claims that one of the market makers sold 3.5 million of the 4 million tokens at the TGE: https://etherscan.io/address/0xcEfE7FC3Ee3d6804B9073A69B2F45C67253Cc3a5#tokentxns
Increase lending to market makers to support liquidity
The first picture below is a snapshot of the wallet before the TGE. The second picture is the token economics. Before the TGE, there were more than 10 million tokens in circulation (which does not match the token economics). The third picture is the marketing incentives of the CEX. Gate, KuCoin, and Bitget need to confirm this.
Notably, in the first 9 hours after the TGE, the ZKX team blocked all ZKX transfers from Starknet to mainnet.
All transactions during this time period were from the team/market makers/CEX. About 1 million tokens were sold during this time period. The team denies this.
Because market makers needed liquidity, the token economics were changed at the last minute of the TGE to increase the market maker allocation from 4% to 8.5%.
During the first 9 hours when only the CEX/market maker/team owned ZKX, nothing was known about what caused the CEX price to crash. Investors were not informed of the entire process.
The worst part was that they were given time to clarify, but a month later they shut down the project citing lack of funds and said they were dealing with threats (from nowhere).
The team did not explain how the $7.6 million was spent over the past three years, nor did it explain why the TGE failed.
If market makers Amber Group, Flowdesk, and IMC required loans that were twice as large as the actual amount (over-loans), then these market makers should give an explanation.
CEX platforms CoinEx Global, Gate, KuCoin, and Bitget should explain whether they sold marketing incentive tokens.
If not, then the ZKX team is lying.
During my interactions with the team, the ZKX team was not transparent.
$7.6 million in less than 3 years due to high costs (Starknet is not subsidized?) and 30+ people on the payroll? Never heard of such a case.
Hopefully other ZKX investors will speak out and express their opinions, the crypto industry needs to eliminate this kind of opaque behavior, and the Starknet team needs to explain why they support this project.