ZKX, a social derivatives trading platform built on the Starknet Layer-2 network, suddenly went down, drawing the ire of investors and market makers alike.
The closure, announced on July 30 by founder Edouard Juvani Tour, was primarily due to the project’s lack of economic viability. However, the suddenness and lack of communication that followed the decision left many stakeholders in limbo.
Amber Group Shares Perspectives
Amber Group, a major market maker on ZKX (ZKX), has expressed shock at the sudden halt in platform activity. The company recently reached out to X to share its perspective, criticizing ZKX’s lack of communication.
In a post, the company said it was involved in ensuring liquidity for ZKX’s token generation event on June 19. To support this, Amber Group borrowed 2 million ZKX tokens without any additional fees.
Amber claimed that she continued to buy ZKX tokens to maintain liquidity as the price fell despite the lack of organic buying interest.
However, on June 24, ZKX requested a return of 1 million tokens to reduce circulation and strengthen community trust. Amber Group says it complied and reduced the loan to 1 million tokens.
Despite these challenges, by the time ZKX announced its closure, Amber had absorbed an additional 2 million from the open market to provide consistent liquidity, accumulating a total of 3 million ZKX tokens.
The Amber Group stressed the importance of transparency in their post, noting that ZKX’s lack of communication throughout the entire process sets a concerning precedent for the industry.
HashKey is criticized for lack of transparency
Other investors have echoed Amber’s sentiments. For example, HashKey Capital criticized ZKX for failing to provide transparent financial details and operating plans.
The venture capital firm also posted to X, lamenting the loss of trust and confidence due to ZKX’s unresponsive communication and Tur’s mishandling of the situation.
Another investor, Ye Su, also expressed disappointment at the lack of advance information before the closure, saying the ZKX team refused to provide financial and spending details.
As if to add fuel to the fire, renowned blockchain researcher ZachXBT also expressed his feelings about the ZKX wave, debunking it as a falsehood.
Despite the backlash, Henri, the Starknet Foundation’s director of developer relations, has defended ZKX, arguing that the team has made significant contributions to the ecosystem and that it is unfair to label them as scammers.
Henri said ZKX’s sudden closure was due to poor decision-making rather than malice as ZachXBT claimed.
ZKX Founder Offers Clarification
In addition to this discourse, Tur defended her position in a post on X, which elaborated on the claims.
Tur said all user funds previously held by the project have been returned, with more than 95% of withdrawals completed.
He also admitted that the ZKX team underestimated operational costs, including the costs of maintaining the Layer 3 blockchain and manipulating markets, which significantly exceeded revenues.
Tour detailed the financial challenges and struggles to remain liquid, highlighting that the project had only raised $7.6 million in cumulative funding over four years, which was not enough to sustain operations.
The ZKX founder also described the difficulties the company faced during the token creation event, namely low demand and severe selling pressure, which he claimed contributed to the token’s poor performance.
He stressed that the team acted in good faith to balance the interests of all stakeholders and explore alternatives to continue the project.