HashKey

ZKX shutdown sparks investor outrage, Amber Group responds

Published

5 months ago

August 4, 2024

The sudden shutdown of ZKX, a social derivatives trading platform on the Starknet layer-2 network, drew the ire of both investors and market makers.

The closure, announced on July 30 by founder Eduard Jubany Tur, cited a lack of economic feasibility for the project as the primary reason. However, the abruptness and lack of communication accompanying that decision left many stakeholders blindsided.

Amber Group shares perspective

Amber Group, a key market maker for ZKX (ZKX), has expressed shock at the sudden cessation of the platform’s activities. Recently, the company took to X to share its perspective, decrying the lack of communication from ZKX.

In light of recent developments with ZKX, while we honor our contractual confidential obligations with our clients including ZKX, we’d like to share our perspective and necessary information as an investor and market maker to promote transparency and support the community. We… https://t.co/Erx038azsH
— Amber Group (@ambergroup_io) August 3, 2024

In the X post, the firm revealed it had been involved in ensuring liquidity for ZKX’s token generation event on June 19. To facilitate this, Amber Group received a loan of 2 million ZKX tokens, with no additional fees attached.

Amber claimed that despite a lack of organic buying interest, it continued to purchase ZKX tokens to maintain liquidity, even as prices declined.

However, on June 24, ZKX requested the return of 1 million tokens to reduce circulation and bolster community confidence. Amber Group says it complied, thereby reducing its loan to 1 million tokens.

Despite the challenges, by the time ZKX announced its shutdown, Amber had accumulated a total of 3 million ZKX tokens after it hoovered up an additional 2 million from the open market in a bid to provide consistent liquidity.

In its post, Amber Group emphasized the importance of transparency, noting that the lack of communication from ZKX during the entire process set a concerning precedent for the industry.

HashKey decries lack of transparency

Other investors have also echoed sentiments similar to Amber’s. For instance, HashKey Capital has criticized ZKX for its failure to provide transparent financial details and operational plans.

The venture capital firm also posted on X, lamenting the erosion of trust and confidence due to ZKX’s unresponsive communication and the mishandling of the situation by Tur.

Much like other investors, we experienced a lack of transparency and accountability from @zkxprotocol in disclosing their financials, allocation of funds and operational plans.
Additionally, their reluctance to communicate was disappointing, and the manner in which the founder… https://t.co/4EyaUdEp06
— HashKey Capital (@HashKey_Capital) August 2, 2024

Ye Su, another investor, also voiced frustration over the lack of heads-up before the shutdown, stating that the ZKX team refused to provide financial or spending details.

To add fuel to the fire, renowned blockchain investigator ZachXBT also made their feelings known about the ZKX debacle, suggesting it was a rug pull.

Despite the backlash, Henri, the director of developer relations at the Starknet Foundation, defended ZKX, arguing that the team had made significant contributions to the ecosystem and that labeling them as scammers was unfair.

Henri suggested that ZKX’s abrupt closure stemmed from poor decision-making rather than ill intent as alleged by ZachXBT.

ZKX founder offers clarification

Adding to the discourse, Tur defended his position in a detailed X post addressing the allegations.

Tur clarified that all user funds previously held by the project had been returned, with more than 95% of withdrawals completed.

New Statement
There have been many statements being issued by multiple parties, we wanted to address some of these concerns including the usage of funds, TGE performance, and so forth:
Current State of Sunset:
All user’s funds have been returned. As of today, more than 95%…
— Eduard (@0xEduard) August 1, 2024

He also acknowledged the ZKX team’s underestimation of operational costs, including maintaining a layer-3 blockchain and market-making expenses, which significantly exceeded revenue.

Tur detailed the financial strains and efforts to maintain liquidity, highlighting that the project’s cumulative fundraising of $7.6 million over four years was not sufficient to sustain operations.

Additionally, the ZKX founder explained the challenges faced during his company’s token-generating event, including low demand and significant selling pressure, which he claimed contributed to the token’s poor performance.

He emphasized that the team acted in good faith, attempting to balance the interests of all stakeholders and exploring alternatives to sustain the project.

Source link

cryptocurrency

Here’s what HashKey’s 30% token allocation for staff could mean for investors

Published

3 weeks ago

December 5, 2024

admin

HashKey recently announced that it allocated 300 million tokens to team incentives with a 36-month unlocking period after the launch of its native token HSK. How does this impact investors?

On Dec. 5, HashKey posted an official statement that explains the allocation of HSK tokens for team members. The notice stated that HashKey allocated 30% of its 1 billion token supply for the internal team which follows an unlocking period that consists of a minimum 3-month lock-up period and a 35-month linear release.

“We’d like to clarify key aspects of HSK’s tokenomics and team incentives structure: HSK has a total supply of 1 billion tokens, with 300 million allocated for team incentives,” HashKey wrote in the firm’s official statement.

HashKey said that the 30% token allocation for team members was done to support the growth of HashKey’s ecosystem. The firm claimed that the tokens will be used for licensed exchanges, investment services, tokenization and infrastructure solutions.

Tokens can also be used for exchange fee payments, trading discounts and accessing community incentives. Therefore, current team members and former employees who hold HSK have to adhere to the firm’s token management policies, which regulate issuing, holding and selling tokens in accordance with the lock-up schedule.

Moreover, the Hong Kong-based crypto exchange clarified that employee resignation does not allow former team members to get an early or full token unlock. This is done to prevent former employees from cheating the system and selling tokens before the unlock period.

As previously reported by crypto.news, HashKey first opened deposits for HSK on Nov. 7 at 07:00 UTC, while spot trading for the HSK/USDT pair started on Nov. 26 at 10:00 UTC. The opening of HSK withdrawals occurred on the next day, Nov. 27 at 10:00 UTC.

In the initial announcement, the exchange explained that it had prepared a supply of 1 billion tokens, with 65% of the tokens being allocated to marketing and business development while 30% of the supply went to the HashKey team.

What does the 30% HSK allocation for team members mean for investors?

On one hand, allocation of tokens before a new launch is common practice in the crypto sphere. It is meant to incentivize team members and align their interests with the success of the project. That way, they will be more motivated to work harder to develop the project.

In HashKey’s case, the 36-month linear release period suggests the team is committed to the project’s long-term development. The unlocking period also reduces the risk of a pump-and-dump happening, because team members are unable to sell tokens quickly to gain profit within the period.

On the other hand, setting aside a chunk of the token supply for team members means that there are fewer tokens available in circulation. Usually when the portion reserved for insiders is too high, there will be higher pressure for insiders to sell tokens.

When the lockup period ends and tokens start unlocking, the team could still potentially sell their tokens to realize profits, which would in turn increase supply and potentially lower prices. Therefore, investors would need to keep an eye on the unlocking timeline and the project’s development milestones.

According to data from CoinGecko, HashKey’s platform token is down 9.4% in the past day. HSK is currently trading hands at $1.31 at the time of writing. In the past week, the token has gone up by nearly 20% and has a fully diluted valuation of $1.3 billion. Though, there is no information about how many tokens are circulating on the market right now.

Source link