Shares of micro-cap follower Strategy plummeted. Investors fear fraud

Quotes of micro-cap company Cypherpunk Technologies, which, like Strategy, invests in cryptocurrency, collapsed on June 5 by more than 47%. Investors staged a sell-off after it became known about a critical vulnerability that could flood the market with fake Zcash tokens. It is on them that Cypherpunk is betting.

Shares of Cypherpunk, which invests in Zcash and whose shareholders include Winklevoss Capital crypto-billionaires Cameron and Tyler Winklevoss, fell by more than 47% on Nasdaq on June 5, to their lowest level since March. At the pre-market on June 8, the quotes compensated for some of the losses, jumping by 13%.

The selloff began after the blockchain project Zcash disclosed information about a critical vulnerability from four years ago. It allowed attackers to stealthily issue tokens, Decrypt writes. The vulnerability has now been fixed, Zcash said in a post on social network X. And there is no evidence that anyone has exploited it, Cypherpunk noted in his account. He also confirmed plans to continue investing in the cryptocurrency.

Market participants were not reassured by this, Decrypt notes. The fact is that Zcash belongs to privacy-oriented cryptocurrencies, i.e. those that ensure complete anonymity of users and privacy of transactions. Therefore, the exploitation of vulnerabilities remains completely undetected.

The vulnerability was discovered by cybersecurity researcher Taylor Hornby using Anthropic's Claude Opus 4.8 AI agent, Be(in)Crypto writes. Hornby ran the check on Ma 29, and within a day had already identified the flaw. Interestingly, Anthropic had released the model just a day earlier.

The portal writes that Hornby now intends to audit Monero, another coin designed for privacy. With the appearance of this information, its value fell by 10%.

"The holy trinity is dead," co-founder and former director of cryptocurrency exchange BitMEX Arthur Hayes wrote on social network X. The three privacy-focused cryptocurrencies in question are Dash in addition to Monero and Zcash. Hayes wrote that he sold his coins outright after the vulnerability in Zcash was discovered, but did not rule out purchasing them again.

"Some newcomers might be a little concerned, but essentially that [the risk of creating counterfeit coins] is part of the deal," Nick Carter, founder of Castle Island Ventures, an investment firm that specializes in investing in blockchain startups and crypto assets, told Decrypt.

Cameron Winklevoss also wrote that there will always be bugs in any system, but it's important that experts find them before attackers do.