ZKJ Token Plummets 63% in Flash Crash, $99M Liquidated

The Polyhedra Network’s native token, ZKJ, experienced a devastating flash crash on June 15, plummeting more than 63% in under two hours. This event triggered over $99 million in liquidations and sparked widespread accusations of rug-pulling across the crypto community.

According to blockchain tracker Lookonchain, six whale wallets collectively sold 5.23 million ZKJ tokens for approximately $9.66 million, right before the crash. These wallets had previously removed liquidity from both ZKJ and KOGE, exchanging KOGE for ZKJ and then dumping ZKJ en masse. This aggressive sell-off drained liquidity and triggered a steep price drop, prompting a wave of forced liquidations for leveraged long positions.

Among those liquidated were six traders who each lost over $1 million, with ZKJ accounting for 81.3% of all crypto liquidations in just four hours. ZKJ’s price nosedived from $1.98 to a low of $0.7625, marking a more than 60% fall. CoinMarketCap presented an even grimmer scenario, showing the token collapsing over 80% to $0.33, wiping out the token’s market cap to under $95 million. Although ZKJ briefly rebounded to $1.41, it quickly fell back to hover around $0.80 by midday.

What’s particularly shocking is that ZKJ had been trading in a relatively stable range between $2.05 and $1.98 for over a month, making the sudden breakdown all the more alarming. Crypto X users were quick to call out what many now suspect to be a coordinated “pump and dump” or even a “long-planned harvesting operation.” A key post by user ETH APPLE alleged that the KOGE pool had run out of USDT, which left liquidity providers stranded and triggered a mass conversion of KOGE into ZKJ, ultimately crashing both tokens.

“The issue began when the KOGE pool ran out of USDT, leaving LPs unable to exit positions,” wrote ETH APPLE. “This led to a mass sell-off of KOGE into ZKJ… the KOGE team hadn’t added any USDT to the pool.”

The ZKJ token, which had been trading at around $2, experienced a significant crash, plummeting to $0.33. This dramatic decline can be attributed to several factors, including market sentiment, regulatory concerns, and technical issues. The crash began when a large address on the Tron blockchain, holding 12,369,162 USDT, was frozen. This event triggered a wave of panic selling among investors, who feared that the frozen funds might be linked to illicit activities or a security breach. The sudden freeze of such a substantial amount of USDT raised alarms about the stability and security of the Tron network, leading to a loss of confidence in the ZKJ token.

The panic selling was exacerbated by the broader market conditions, which were already volatile due to regulatory uncertainties. The U.S. Securities and Exchange Commission's (SEC) actions, such as the delay in decisions on spot ETFs for Cardano and Avalanche, added to the market's jittery state. Investors, already on edge, reacted strongly to the news of the frozen USDT, leading to a massive sell-off of ZKJ tokens.

Technical issues also played a role in the crash. The Tron network, which supports the ZKJ token, experienced temporary disruptions and delays in transaction processing. These technical glitches further eroded investor confidence, as they raised concerns about the reliability and efficiency of the network. The combination of regulatory uncertainties, market panic, and technical issues created a perfect storm that led to the ZKJ token's dramatic price crash.

Despite the crash, some analysts remain optimistic about the long-term prospects of the ZKJ token. They point to the underlying technology and the growing ecosystem of decentralized applications (DApps) built on the Tron network. The network's ability to handle high transaction volumes and its support for smart contracts make it an attractive platform for developers and investors alike. Additionally, the recent launch of a $100 million venture capital fund aimed at accelerating the growth of the Pi Network ecosystem suggests that there is still significant interest and investment in the broader cryptocurrency market.

However, the crash serves as a reminder of the inherent risks and volatility associated with cryptocurrency investments. Investors must remain vigilant and informed about market conditions, regulatory developments, and technical issues that could impact the value of their holdings. The ZKJ token's price crash highlights the need for robust risk management strategies and a diversified investment portfolio to mitigate the potential impact of sudden market movements.