Arthur Hayes claims that Maelstrom sold its entire position in Zcash after recent disclosures regarding the Orchard Pool vulnerability increased the perceived risk to ZEC’s monetary integrity. The move effectively ends his recent “Holy Trinity” trade on ZEC, NEAR and HYPE, while leaving Worldcoin as the AI-linked bet he believes the fund still holds.

“The Holy Trinity is dead” – Hayes he wrote to X. “Unfortunately, due to the Orchard Pool exploit, I had to throw away my entire ZEC bag.”

Why is Hayes abandoning Zcash now?

The post follows a detailed statement from Zooko Wilcox, Jason McGee and Taylor Hornby, who described the issue as an “orchard fraud vulnerability.” According to their summary, Hornby discovered a critical vulnerability in Zcash Orchard on May 29 and disclosed it to the Zcash Open Development Lab, which then coordinated an emergency response that ended on June 2. The key assumption was clear: the vulnerability “could be exploited to undetectably create an unlimited amount of fake ZECs in Orchard.”

This disclosure changed the framework of the market. Previous ecosystem announcements emphasized that the vulnerability had been fixed, there was no evidence of exploitation, and that user funds remained unthreatening. But Wilcox, McGee and Hornby added an significant caveat: Due to Orchard’s privacy, there is no way to cryptographically prove whether a vulnerability was exploited when it existed. This distinction is at the heart of Hayes’ decision to leave.

“While I believe that minting a coin is extremely unlikely, it cannot be formally proven that it is cryptographically impossible,” Hayes wrote. “Privacy from AI, government and big tech requires perfection, not improbability. I read about this exploit today and didn’t appreciate how it violated my narrative mental map.”

Josh Swihart, founder and CEO of Zcash Open Development Lab, offered his own explanation in a post titled “Never Again.” He described the Orchard bug as a bug in one of the system’s rules: the rule was written loosely enough that it could accept false information and still go through. In other words, the problem was not a leak of personal data, but a failure in the robustness of the evidence system, a problem that could undermine confidence in whether an invalid value could have been created within a protected pool.

The fallback solution required coordinated network action, rather than a plain wallet or application patch. ZODL and the broader Zcash ecosystem moved to temporarily disable Orchard activities and then restore them with a patched circuit. A fix might have closed the loophole, but in the case of a privacy good, the reputational damage came from the remaining uncertainty: no evidence of counterfeiting is not the same as cryptographic proof that counterfeiting never occurred.

Hayes said the roughly 30% sell-off in ZEC forced him to reassess the situation. “The 30% dump made me rethink and I had to take a profit on the entire position,” he wrote. His logic was not that there was exploitation, but that the privacy thesis that he attached to ZEC required a higher standard than probabilistic assurance.

The sale ends with a quick turnaround following Hayes’ May 22 “Holy Trinity” call, when he grouped HYPE, ZEC and NEAR into a three-token basket. “When you have a position, trading is easy, sit back and watch the numbers grow,” he wrote at the time, calling it “HYPE, ZEC, CLOSE TO THE HOLY TRINITY.”

HYPE represented the on-chain derivatives and protocol revenue trading, NEAR the artificial intelligence and on-chain abstraction angle, and ZEC the privacy aspect. The day before the ZEC sale, Hayes had already said he had exited all of his HYPE and NEAR positions, citing higher energy prices, an upcoming immense AI IPO and the political risk of AI as reasons for profit-taking.

Still, Hayes did not close the door on Zcash. “We will continually re-evaluate our thinking and if my assumptions turn out to be wrong, we will purchase again, hopefully at lower prices,” he wrote. “Privacy is priceless and I have no problem eating humble pie and purchasing a much more expensive one again.”

For now, Worldcoin is the remaining public expression of its AI-related rotation. “We continue to hold WLD and are excited to have Lord Elon pumping our bags,” Hayes added. This follows his recent public call for a bull market in WLD, linking the move to renewed speculation about AI assets and the OpenAI IPO.

At press time, ZEC had fallen by more than 45% in 24 hours.

Featured image created with DALL.E, chart from TradingView.com