Polyhedra cites liquidity attacks, Wintermute deposits behind ZKJ price drop

The team behind Polyhedra Network reported several factors that likely contributed to an 83% price crash of its ZKJ token on Sunday.

In a Monday X post, Polyhedra attributed five significant factors causing Polyhedra Network (ZKJ) to fall to $0.32 from $1.92 within hours — a drop of more than 80%. According to the blockchain project, there were “significant token deposits stemming from a coordinated on-chain liquidity attack, substantial deposits by Wintermute into centralized exchanges, and cascading liquidations on these exchanges.”

Polyhedra said several wallets had “coordinated a liquidity attack with an egregious malicious attempt,” with withdrawals targeting a ZKJ/KOGE liquidity pool on PancakeSwap, followed by “aggressive ZKJ sell-offs.” The affected trading pairs had fragile and imbalanced liquidity, leading the sell pressure to extend into ZKJ’s primary USDT pool.

According to Polyhedra, one Wintermute address also deposited more than 3.39 million ZKJ tokens to centralized exchanges “in the hour surrounding the crash,” while the same one deposited roughly the same amount into “on-chain, CEX-labelled deposit addresses and other addresses.”

“The initial investigation highlights substantial token transfers by Wintermute coinciding with extreme market volatility and a coordinated withdrawal of liquidity from PancakeSwap's ZKJ/KOGE pool,” said Polyhedra, adding:

“We suspect the […] addresses coordinated a liquidity attack with an egregious malicious attempt. These actions removed critical market depth, particularly in a pool with fragile, concentrated liquidity provisioning.”

The Sunday ZKJ price drop wiped out roughly $500 million in market value at the time. The price of the token, which had been hovering near $2 since December 2024, was at $0.39 at the time of publication.

Related: Crypto Fear & Greed Index stays in greed territory amid Israel-Iran conflict

Throwing blame at KOGE and Wintermute?

Polyhedra initially attributed the price drop to a “series of abnormal on-chain transactions” on the ZKJ/KOGE trading pair. The project’s co-founder, Tiancheng Xie, said KOGE had “rugged all of us” following the report.[embedded content]

KOGE is a governance token for the BNB48 Club in the Binance ecosystem. A Binance Square account that appeared to be connected to a KOGE team member suggested no one involved with the group had “dumped” the token and contributed to the price drop.

“After throwing $KOGE and Wintermute, only your damn air project is innocent,” said 48ClubIan in a Monday translated statement on Binance Square.

Magazine: Baby boomers worth $79T are finally getting on board with Bitcoin