The cryptocurrency sector experienced a jolt with the unexpected closure of ZKX, a derivatives trading platform on Ethereum’s Starknet layer-2 network.
Amber Group, a key player in the platform’s liquidity management, has expressed dismay and is advocating for increased transparency across the industry.
Unexpected shutdown and economic challenges
Four days ago, Eduard Jubany Tur, the founder of ZKX, unexpectedly announced the platform’s discontinuation, citing untenable economic conditions. This declaration caught the crypto community off guard, including Amber Group, which had been significantly involved in ZKX’s operations.
As a prominent asset manager, Amber Group provided essential liquidity and participated in the token generation event for ZKX in June. It ensured the market had sufficient token flow by acquiring a loan of 2 million ZKX tokens at no additional charge.
Despite a lacklustre initial buying interest, Amber Group purchased ZKX tokens to sustain market liquidity as the token prices declined. To stabilise the market and enhance community confidence, ZKX’s team requested on June 24 that Amber Group return half of their loaned tokens. Complying with the request, Amber Group reduced their loan to 1 million tokens.
Furthermore, they acquired an additional 2 million tokens from the open market, increasing their total holdings to 3 million. This strategy was part of Amber Group’s broader effort to maintain market stability, mainly after ZKX had secured $7.6 million in a funding round just a month earlier, with contributions from notable investors like Flowdesk, GCR, and DeWhales.
Call for transparency and accountability
The closure of ZKX has affected its direct stakeholders and highlighted the broader issues of transparency and accountability within the crypto industry. Prominent early investors in ZKX, including HashKey, Amber Group, Crypto.com, and StarkWare, have been vocal about their frustrations. HashKey, in particular, criticised ZKX for its opaque handling of financials, fund allocation, and operational strategies.
They emphasised the detrimental impact of poor communication on trust and the potential for securing future investments. “The reluctance of ZKX to engage openly was disappointing, and the founder’s management of the crisis was unfortunate,” a HashKey representative remarked, stressing the essential nature of clear communication and responsible governance in sustaining entrepreneurial ventures within the volatile cryptocurrency market.
The sudden shutdown of ZKX by its founder has stirred concerns regarding crypto platforms’ governance and operational transparency. Key stakeholders like Amber Group are pushing for a paradigm shift towards more open and accountable business practices to preserve investor trust and ensure the healthy development of the crypto ecosystem.