Dragonfly holds Zcash despite critical bug, says Haseeb Qureshi

Dragonfly partner Haseeb Qureshi speaks out about the controversy surrounding the recently patched Zcash bug. According to him, the damage is limited and his firm Dragonfly is simply holding onto its ZEC position. At the same time, he indicates that he is personally investing in ZODL.

Zcash is available at OKX and Bybit.

Why shielded ZEC in particular carried the risk

Qureshi explains that the bug, if exploited before the patch, would have almost exclusively affected holders of shielded ZEC. Transparent ZEC would have remained unaffected. According to him, that is an important distinction because nearly all market liquidity on exchanges is in transparent ZEC. Someone who had created fake shielded ZEC would therefore have had little ability to sell those coins.

That the situation did not spiral out of control is also evident from the movements in the shielded pool. The share of shielded ZEC in the total supply declined over the past 48 hours from only 31% to 30%, suggesting that there is no mass outflow. Earlier, the discovery of the bug had already caused significant price pressure on Zcash.

New turnstile should restore trust

The Zcash team is working on a concrete solution to restore trust in the shielded pool. The plan is to introduce a new turnstile system and a fresh shielded pool, so that it can be definitively demonstrated that the old pool was not inflated with counterfeit coins. That is a step intended to reassure the community about the integrity of the protocol.

Despite all the turmoil, Dragonfly is thus simply maintaining its ZEC position. Qureshi adds that he is personally investing in ZODL. Not everyone in the market has remained so calm: earlier, Arthur Hayes dumped his entire Zcash position after the news about the exploit, and also a large ZEC whale lost $70 million in 24 hours.