The sudden shutdown of ZKX, a social derivatives trading platform on the Starknet layer 2 network, has angered investors and market makers alike.
Project founder Edward Jobani Tor announced the project’s closure on July 30, citing economic inadequacy as the primary reason. However, the sudden decision and the lack of communication that accompanied it left many stakeholders confused.
Amber Group shares its perspective
Amber Group, a major market maker for ZKX (ZKX), has expressed shock over the sudden halt of the platform’s activities. The company recently took to X to share its perspective, denouncing the lack of communication on ZKX’s part.
In a post on X, the company revealed that it participated in the liquidity guarantee for the ZKX token generation event on June 19. To facilitate this, Amber Group received a loan of 2 million ZKX tokens, at no additional fees.
Amber claimed that despite the lack of organic buying interest, she continued to buy ZKX tokens to maintain liquidity, even as prices fell.
However, on June 24, ZKX requested the return of 1 million tokens to reduce circulation and boost community confidence. Amber Group says it complied, thus reducing its loan to 1 million tokens.
Despite the challenges, by the time ZKX announced its shutdown, Amber had raised a total of 3 million ZKX tokens after raising an additional 2 million tokens from the open market in an attempt to provide stable liquidity.
In its post, Amber Group emphasized the importance of transparency, noting that the lack of communication on ZKX’s part throughout the entire process sets a worrying precedent for the industry.
HashKey criticizes lack of transparency
Other investors have echoed Amber’s sentiments. For example, HashKey Capital criticized ZKX for failing to provide transparent financial details and operational plans.
The venture capital firm also posted on X, lamenting the erosion of trust due to ZKX’s lack of response to communications and Tur’s mishandling of the situation.
Yi Su, another investor, also expressed, frustration Due to the lack of prior notice before the closure, noting that the ZKX team declined to provide financial or spending details.
Adding fuel to the fire, well-known blockchain investigator ZachXBT also expressed his feelings on the ZKX debacle, suggesting that it was a scam.
Despite the backlash, Henry, director of developer relations at StarkNet, said, defend ZKX, claiming that the team has made significant contributions to the ecosystem and that calling them scammers was unfair.
Henry suggested that ZKX’s sudden closure was due to poor decision-making and not bad faith as ZachXBT claimed.
ZKX Founder Provides Clarification
In addition to the letter, Torr defended his position in a detailed post on X addressing the accusations.
Tor explained that all user funds previously held by the project have been returned, with more than 95% of withdrawals completed.
He also acknowledged that the ZKX team reduced operating costs, including maintaining the blockchain layer 3 and market making expenses, which significantly exceeded revenue.
Torr detailed the financial pressures and efforts to maintain liquidity, highlighting that the project’s cumulative fundraising of $7.6 million over four years was not enough to support operations.
Additionally, the ZKX founder explained the challenges his company faced during the token generation event, including low demand and heavy selling pressure, which he claimed contributed to the token’s poor performance.
He stressed that the team acted in good faith, trying to balance the interests of all stakeholders and explore alternatives to sustain the project.