ZKX Protocol Faces Crypto Industry Backlash After Sudden Shutdown

• ZKX protocol’s investors have called out the project’s lack of transparency and accountability after a sudden shutdown.
• ZKX protocol has faced backlash after ceasing its operations.
• The protocol cited a lack of an economically viable path among the reasons for its discontinuation.
• Investors complained that they were not informed of the shutdown.

Two crypto firms, Amber Group and HashKey Capital, have issued statements criticizing the ZKX Protocol for ceasing its operations suddenly, without prior notice.

The Starknet-based social derivatives trading platform suspended its business operations on July 30, citing a lack of an economically viable path and minimal user engagement. 

The protocol said it had delisted all markets, closed all positions, and returned funds to each user’s account.

While ZKX implied that its users wouldn’t be affected, giving them a sunset period to shift their funds, investors who previously backed the project didn’t take the development lightly. Market maker Amber Group was the latest to share its perspective about the shutdown.

Amber Group’s Take on ZKX Protocol Shutdown

In a recent X post, Amber Group said the decision to shut down the ZKX protocol was “made without prior communication,” highlighting the importance of transparency in the nascent digital asset industry.

“It sets a concerning precedent and impacts investors, service providers, and, most importantly, the community. While we acknowledge the risks involved in entrepreneurship, we believe transparency and accountability are fundamental to our industry and each project’s ultimate success.” The post read.

Amber Group has been involved with ZKX since the project’s TGE, which saw the market maker receive a loan of 2 million ZKX tokens to provide liquidity on the launch date. The market maker has been “net-buying” ZKX tokens since the listing due to a lack of organic buying interest upon launch.

Per the statement, Amber Group reduced its loan to 1 million tokens on June 24 following a request from the ZKX team. This was the last communication between the protocol and the market maker before the shutdown.

“The last update we received was on July 30, when the project announced the cessation of operations.” Amber Group said.

Other companies that have called out ZKX for exhibiting a lack of transparency and accountability include HashKey Capital, which termed the protocol founder’s handling of the situation “regrettable.”

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