Hayes exited ZEC after an Orchard privacy bug raised supply doubts.
He also liquidated HYPE and NEAR while rotating his portfolio.
The Zcash flaw was patched, but future exploitation cannot be ruled out.
Arthur Hayes, co-founder of BitMEX, has fully exited his positions in Zcash (ZEC), Hyperliquid (HYPE), and NEAR Protocol (NEAR).
The decision comes at a time when the crypto market is still digesting the implications of a flaw found in the Orchard shielded pool, a core component of Zcash’s privacy system.
The move has drawn attention across the digital asset space, not only because of Hayes’ profile as a macro investor, but also due to the nature of the vulnerability, which raised questions about the integrity of ZEC’s supply mechanics inside its shielded environment.
Orchard vulnerability triggers uncertainty in Zcash
The trigger for the sell-off was a vulnerability discovered in the Orchard shielded pool, which is designed to enable private transactions on the Zcash network using zero-knowledge proofs.
The issue raised concerns that, under certain conditions, it may have been theoretically possible to create counterfeit ZEC within the shielded system without immediate detection.
While Zcash developers moved quickly to deploy an emergency patch, the core concern was not just the existence of the bug itself, but the inability to verify whether it had ever been exploited before it was fixed.
Because shielded transactions are designed to be private, there is no straightforward way to retroactively audit all activity in a way that could definitively rule out past abuse.
Market reaction was immediate and sharp.
ZEC experienced a heavy sell-off, with its price falling by over 45% during the height of the reaction.
Liquidity thinned quickly as traders rushed to reduce exposure to an asset suddenly carrying uncertainty around its supply integrity.
The incident reignited a long-running debate around privacy-focused blockchain systems.
While zero-knowledge proofs are widely regarded as one of the strongest cryptographic tools available for privacy, they also introduce complexity that can make historical verification of state changes significantly more difficult compared to transparent blockchains.
Arthur Hayes exits ZEC, HYPE, and NEAR positions
Against this backdrop, Arthur Hayes confirmed that he had fully liquidated his ZEC holdings.
Hayes also closed positions in HYPE and NEAR, signaling a broader portfolio adjustment rather than a single-asset reaction.
Hayes described the situation in blunt terms, stating that what he previously referred to as his “Holy Trinity” thesis no longer held.
The key issue for Hayes was not confirmed exploitation. Instead, it was the presence of unresolved uncertainty.
Even with a patch in place, the inability to definitively prove whether counterfeit issuance had occurred prior to the fix created a level of risk he was no longer willing to carry in a privacy asset.
The Holy Trinity is dead. Sadly due to the Orchard Pool exploit, I had to dump our entire $ZEC bag.– While I think it’s extremely unlikely of any minting, it cannot be formally cryptographically proved impossible– The privacy from AI, govt, big tech narrative demands perfection…
— Arthur Hayes (@CryptoHayes) June 5, 2026
Alongside the ZEC exit, Hayes also liquidated positions in HYPE and NEAR.
While no direct technical link was identified between those assets and the Zcash vulnerability, the simultaneous sell-off suggests a broader repositioning of capital rather than an isolated reaction.
