Zcash Backer Bootstrap Says Split Due to Clash Over Nonprofit Rules, Zashi Future

The Electric Coin Company (ECC), the primary developer of Zcash, announced that its entire team resigned following a governance dispute with the Bootstrap board. Bootstrap, a nonprofit organization, cited concerns about potential legal risks from a proposed privatization of Zashi, a Zcash-centric wallet. ECC CEO Josh Swihart described the departure as a constructive discharge, indicating a hostile work environment due to governance disagreements.

The split stems from a fundamental disagreement over governance and fiduciary responsibilities under Bootstrap's nonprofit status. Bootstrap expressed concerns that the proposed privatization of Zashi could introduce legal vulnerabilities and jeopardize the Zcash ecosystem. The ECC team emphasized that the protocol itself remains unaffected but said governance actions had rendered their work untenable.

Zcash's native token, ZEC, dropped 16% over the past 24 hours, trading above $406 at the time of writing. Whale investors increased exposure to ZEC, buying nearly $914,000 worth of the token, while newly created wallets accumulated about $1.74 million.

Why Did This Happen?

The core disagreement centers on Bootstrap's nonprofit obligations and ECC's operational independence. Bootstrap emphasized the need for caution in transactions to ensure assets serve the public good, not private benefit. ECC, in contrast, argued that nonprofit structures can limit access to external capital, which could otherwise benefit the Zcash ecosystem.

The dispute is not about the technical development of Zcash but rather its governance model. Bootstrap stated that it is working with legal counsel to ensure compliance with U.S. nonprofit laws.

How Did Markets React?

ZEC's price reaction was swift, with a 16% drop in the past day. The sell-off was partly driven by uncertainty about the future of Zcash development and governance. Whale activity, however, indicates some optimism, with significant buying activity observed in the last 24 hours.

Market analysts noted that the drop reflects pricing in governance risk rather than a direct threat to the Zcash protocol. The Zcash network remains operational, with no immediate signs of disruption in transactions or user access.

What Are Analysts Watching Next?

Analysts are focusing on whether the new company formed by the former ECC team will maintain or enhance Zcash development. The new entity plans to continue building Zcash but has not yet outlined a detailed roadmap.

Bootstrap is also under scrutiny for its governance approach. The board emphasized its commitment to legal compliance and public interest, but questions remain about its ability to attract capital and innovation.

Investors are monitoring how the Zcash community and ecosystem participants respond to this leadership shift. The coming weeks will be crucial for determining whether development efforts can continue seamlessly or if further fragmentation could occur.