ZKJ token from Polyhedra Network faced an 80% drop, causing a wave of discussions in the crypto community. The primary reason lies in a coordinated liquidity attack.
Circumstances of the ZKJ Token Crash
According to the Polyhedra Network team, the drop was caused by a coordinated liquidity attack, where several wallets suddenly withdrew liquidity from the ZKJ/KOGE pool on PancakeSwap and then began mass selling of tokens. This created significant market pressure, resulting in the token's price collapse.
Wintermute's Role in Liquidity Drop
During the investigation, the team identified that a wallet linked to trading firm Wintermute moved over 3.39 million ZKJ tokens to centralized exchanges around the time of the crash. Concerns arise regarding both the timing of these transfers and the amount of tokens, raising suspicions around the company's actions.
Community Reaction and Market Consequences
The crash of ZKJ also entangled KOGE, the governance token for BNB48 Club, leading to accusations of manipulation. Polyhedra co-founder Tiancheng Xie accused KOGE of being involved in manipulation, but members associated with KOGE denied these allegations. The price depression led to nearly $500 million in market value lost within hours.
The decline in prices of both ZKJ and KOGE highlights the vulnerability of liquidity in decentralized finance and raises new questions about the security of trading platforms. The future of the ZKJ token remains uncertain, causing concern among investors.
