Hayes revealed his new role as Flop Labs CEO and teased a “massive airdrop” from the AI inference protocol in the fourth quarter of 2026.
- Hayes exited ZEC after an Orchard privacy bug raised supply doubts.
- He also liquidated HYPE and NEAR while rotating his portfolio.
- The Zcash flaw was patched, but future exploitation cannot be ruled out.
Arthur Hayes, co-founder of BitMEX, has fully exited his positions in Zcash (ZEC), Hyperliquid (HYPE), and NEAR Protocol (NEAR).
The decision comes at a time when the crypto market is still digesting the implications of a flaw found in the Orchard shielded pool, a core component of Zcash’s privacy system.
The move has drawn attention across the digital asset space, not only because of Hayes’ profile as a macro investor, but also due to the nature of the vulnerability, which raised questions about the integrity of ZEC’s supply mechanics inside its shielded environment.
Orchard vulnerability triggers uncertainty in Zcash
The trigger for the sell-off was a vulnerability discovered in the Orchard shielded pool, which is designed to enable private transactions on the Zcash network using zero-knowledge proofs.
The issue raised concerns that, under certain conditions, it may have been theoretically possible to create counterfeit ZEC within the shielded system without immediate detection.
While Zcash developers moved quickly to deploy an emergency patch, the core concern was not just the existence of the bug itself, but the inability to verify whether it had ever been exploited before it was fixed.
Because shielded transactions are designed to be private, there is no straightforward way to retroactively audit all activity in a way that could definitively rule out past abuse.
Market reaction was immediate and sharp.
ZEC experienced a heavy sell-off, with its price falling by over 45% during the height of the reaction.
Liquidity thinned quickly as traders rushed to reduce exposure to an asset suddenly carrying uncertainty around its supply integrity.
The incident reignited a long-running debate around privacy-focused blockchain systems.
While zero-knowledge proofs are widely regarded as one of the strongest cryptographic tools available for privacy, they also introduce complexity that can make historical verification of state changes significantly more difficult compared to transparent blockchains.
Arthur Hayes exits ZEC, HYPE, and NEAR positions
Against this backdrop, Arthur Hayes confirmed that he had fully liquidated his ZEC holdings.
Hayes also closed positions in HYPE and NEAR, signaling a broader portfolio adjustment rather than a single-asset reaction.
Hayes described the situation in blunt terms, stating that what he previously referred to as his “Holy Trinity” thesis no longer held.
The key issue for Hayes was not confirmed exploitation. Instead, it was the presence of unresolved uncertainty.
Even with a patch in place, the inability to definitively prove whether counterfeit issuance had occurred prior to the fix created a level of risk he was no longer willing to carry in a privacy asset.
The Holy Trinity is dead. Sadly due to the Orchard Pool exploit, I had to dump our entire $ZEC bag.
– While I think it’s extremely unlikely of any minting, it cannot be formally cryptographically proved impossible
– The privacy from AI, govt, big tech narrative demands perfection…— Arthur Hayes (@CryptoHayes) June 5, 2026
Alongside the ZEC exit, Hayes also liquidated positions in HYPE and NEAR.
While no direct technical link was identified between those assets and the Zcash vulnerability, the simultaneous sell-off suggests a broader repositioning of capital rather than an isolated reaction.
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Arthur Hayes’ home office Maelstrom is seeking $250 million in capital investment to finance a private equity fund targeted at mid-sized crypto companies. According to Bloomberg, the fund is designed to provide traditional investors more access to the crypto market amid a spectacular recovery from the FTX-inspired market crash in November 2022.
Hayes PE Fund Targets 6 Company Acquisitions
In a post on Friday, Bloomberg reports that Maelstrom, founded by Arthur Hayes and former BitMEX M&A Head Akshat Vaidya, is actively working to raise $250 million for investment in mid-sized crypto firms.
The fund, tagged as Maelstrom Equity Fund I, is expected to cover the acquisition of six crypto companies, with each purchase expected to range between $40 million-$75 million. Notably, there will be a strategic focus on blockchain service providers, including trading infrastructure and analytics startups.
In a recent X post, Vaidaya, who acts as the managing director, provides more insights into this fund, highlighting the problem and proposed solution.
Vaidaya describes the new initiative as the first control-buyout PE fund to focus solely on the crypto ecosystem. The Maelstrom Equity Fund I is to achieve profitability in three main ways. First of which is providing founders of supporting blockchain services to access clean exit opportunities at reasonable valuations.
Furthermore, the PE fund would also aim to help new TradFi entrants to the crypto space navigate investment in businesses by providing them access to “an acquisition-ready portfolio of cash-flowing, growing businesses for future buyers of crypto businesses like Robinhood, Charles Schwab, X, Wealthfront, etc.”
Finally, Hayes, Vaidaya and newly hired partner Adam Schlegel are also looking to offer capital allocators such as pension funds or other family offices the opportunity to invest capital at scale, e.g, 9 figures+, into the “most fundamentally valuable” sectors of the crypto economy, i.e., the blockchain supporting business, without having to worry about token exposure or market volatility.
Maelstrom PE Fund: High Risk Or Not?
Interestingly, Bloomberg notes that Maelstrom’s proposed equity fund comes amidst a challenging period as PE firms are globally struggling to attract capital. In the crypto market, PE investment is reportedly down to $1.4 billion, representing a 65% decline from the peak of 2021, which suggests a significant business risk for Hayes and partners.
However, a series of high-profile acquisitions amidst a rebounding market since the FTX crash, coupled with the mechanics of the Maelstrom, provides an appealing context for investors. At press time, the total crypto market cap is valued at $3.59 trillion following a 1.06% decline in the last 24 hours.
Featured image from Fortune, chart from Tradingview
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Arthur Hayes, co-founder of BitMEX and a prominent figure in the bitcoin world, is reportedly preparing for a high-profile return to the sector.
His family office, Maelstrom, is seeking to raise at least $250 million for its debut private equity fund, Maelstrom Equity Fund I, which hopes to acquire four to six medium-sized companies in the crypto space, according to Bloomberg reporting.
Each investment is expected to range between $40 million and $75 million, focusing on firms that provide trading infrastructure, data analytics, and other technology services to the crypto ecosystem.
Arthur Hayes is known for creating the perpetual swap, transforming crypto trading platform BitMEX. He became the youngest African American crypto billionaire and received a pardon from President Trump after BitMEX’s anti-money laundering failures.
“$BTC on sale,” Hayes posted on X today. “If this US regional banking wobble grows to a crisis be ready for a 2023-like bailout. And then go shopping assuming you have spare capital.”
Arthur Hayes’ fund details
The new fund represents a bit of a pivot for Maelstrom. While the firm’s previous venture investments were token-focused, the new vehicle will concentrate solely on equity.
“You can’t artificially inflate value with a token that isn’t used in the off-chain world,” said Akshat Vaidya, Maelstrom’s co-founder and managing partner.
By targeting cash-generating, off-chain companies, the fund will acquire businesses with clearer valuations and sustainable growth potential.
Maelstrom plans to structure each acquisition through special-purpose vehicles (SPVs), with the fund as the anchor investor, Bloomberg reported.
Once acquired, these companies will undergo operational improvements, including management upgrades and growth acceleration, before being sold to larger investors within four to five years.
According to Vaidya, the strategy appeals to investors who want exposure to the high-growth, high-cash-flow crypto sector but lack the in-house expertise to manage such investments directly.
Hayes’ reemergence comes amid a broader slowdown in private equity activity within crypto. Deal-making in the sector has fallen sharply since 2022, following the collapse of Sam Bankman-Fried’s FTX.
The Maelstrom fund will be registered in the United States and plans to attract a diverse set of backers, including crypto investors, family offices, and institutional players such as pension funds.
Vaidya said the fund aims for a first close by March 31, 2026, with a full raise completed by September 2026. Hayes will lead the effort alongside Vaidya and newly hired partner Adam Schlegel, with plans to expand the team as the fund grows, according to Bloomberg.
A series of high-profile acquisitions this year, including Coinbase’s $2.9 billion purchase of Deribit and Ripple’s $1.25 billion acquisition of Hidden Road, reveal some renewed investor confidence in the digital assets space.
