Shares of Cypherpunk Technologies (CYPH) plummeted 37% on Friday, sliding to $0.59, after a critical vulnerability was disclosed in the Zcash protocol. The bug, which could have allowed the creation of counterfeit coins, went undetected for four years and was only discovered during an AI-assisted audit.
Cypherpunk, which holds 314,185 ZEC (worth $102 million) as its primary treasury asset, fell below its average purchase price of $337 per coin. The company reported a net loss of $77.2 million in the first quarter of 2026, driven by swings in the value of its Zcash holdings.
Cameron Winklevoss, whose venture capital firm led a $59 million private placement in Cypherpunk in November, publicly defended the network. In a post on X, he stated that bugs are inevitable in blockchain software and emphasized the importance of world-class researchers to harden the network.
ZEC itself crashed 37% to around $329, erasing gains from a multi-year high of nearly $700 in November. Shielded Labs deployed an emergency fix, but could not guarantee the vulnerability was not exploited.
BitMEX co-founder Arthur Hayes noted it is "impossible" to assess exploitation due to Zcash's privacy features, though he called it "extremely unlikely." Cypherpunk countered on X, saying there is "zero evidence" of exploitation.