ZKX shutdown sparks investor outrage, Amber Group responds

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 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.

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.