Zcash Developer Team Quits, XRP ETFs See First Outflows, Prediction Market Regulation Gains Momentum

Zcash (ZEC) plunged nearly 14% on January 8 as the entire core development team from Electric Coin Company (ECC) resigned. The departure was attributed to a governance dispute with Bootstrap, the nonprofit overseeing ECC according to reports. The team cited changes in employment terms that rendered their roles untenable. The resignation was described as constructive discharge by ECC's former CEO, Josh Swihart in an analysis.

The resignation triggered immediate market concerns over the future of Zcash. ZEC dropped to a multi-week low of $382 before stabilizing above $400. The sell-off was fueled by fears of project instability and potential misalignment in governance priorities.

Swihart stated the new team plans to form an independent company to continue the Zcash mission, emphasizing that the protocol itself remains unaffected. The dispute centers on governance rather than technical operations. Zcash co-founder Zooko Wilcox confirmed the network remains secure and operational despite the leadership changes according to TradingView.

Why Did This Happen?

The ECC team accused Bootstrap board members of moving out of alignment with the original mission of Zcash. Specifically, Zaki Manian, Christina Garman, Alan Fairless, and Michelle Lai were named as board members who imposed conditions that made continued work difficult.

The governance structure of Zcash has long been complex, with Bootstrap overseeing ECC as a nonprofit. The dispute highlights the challenges of balancing nonprofit governance with development agility. Swihart described the changes as hostile and incompatible with ECC principles.

How Did Markets React?

Zcash's price drop occurred amid broader market volatility. The token, which saw an 816% gain in 2025, is down nearly 18% year-to-date. The sharp decline left two large positions underwater, with combined unrealized losses exceeding $2.2 million.

The broader crypto market also saw red ink, with spot Bitcoin ETFs losing $486 million and Ethereum ETFs dropping $98 million on the same day. The first outflow for XRP ETFs marked a significant shift in investor sentiment.

XRP ETFs had previously experienced a 54-day inflow streak, but $40.8 million was pulled out on January 7. The 21Shares TOXR product led the outflow, losing $47.25 million. XRP itself fell nearly 14% to $2.08.

What Are Analysts Watching Next?

Analysts are closely monitoring how the Zcash ecosystem resolves governance issues. The new company formed by the departing ECC team could either restore stability or exacerbate fragmentation. The broader market is also watching whether the Zcash protocol can maintain its decentralized identity without the current core team.

The XRP price decline and ETF outflow suggest increased caution among investors. On-chain data indicates that whale selling has slowed, which may signal a temporary market correction.

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