The billionaire Winklevoss twins, involved in the creation of Facebook and who later went on to establish the crypto exchange Gemini and Winklevoss Capital, have made a bold new move into a relatively obscure mid-cap cryptocurrency, Zcash (Zec). Zcash is a niche privacy coin created in 2016 – a generation ago in crypto time – and is the first cryptocurrency to develop zero-knowledge encryption for private peer-to-peer payments.
The Winklevoss deal involved a $58.9 million funding raise led by Winklevoss Capital to pivot an obscure biotech firm, Leap Therapeutics (LPTX), into a Zcash treasury firm. The firm purchased $50 million of ZEC and is in the process of rebranding to Cypherpunk Technologies, under ticker CYPH on the Nasdaq. LPTX shares rose 369% last Wednesday after news of the investment – which has doubled since their purchase.
“Cypherpunk’s launch marks one of the most high-profile bets yet that privacy will become the next flashpoint in crypto,” wrote DLNews in a recent article.
“If Bitcoin is digital gold, Zcash is encrypted bitcoin, or digital cash,” Tyler Winklevoss posted on X. “One is your store of value, the other is how you privately move your value…We’ve been tracking this symbiosis for years and believe that now — as we enter the age of AI — is the right time [for] ZEC.”
Regulatory hurdles
As reported by the Motley Fool, privacy coins like Zcash are not popular with regulators and hence feature an added risk from a regulatory standpoint. “In fact, they’re extremely unpopular, in large part because their privacy features can and often are used to obscure illegal activity. So Zcash’s future prospects are highly dependent on crypto exchanges being willing to list it, knowing that regulators might bring down the hammer on them if they do…
“Thus, whereas Bitcoin’s appeal compounds as a neutral base asset for financial institutions and sovereigns, Zcash’s appeal collides with substantial regulatory and legal issues. Optional privacy is helpful, and there are functions in Zcash that permit audits, but they do not eliminate the political incentive to signal toughness on anonymous finance.”
Privacy: “A rare, vanishing commodity”
Nevertheless, crypto has battled with regulators for years. Bitcoin won that battle – and the asset is now on the balance sheet of a European central bank, the Czech National Bank. Corporations now hold nearly 4% of Bitcoin’s supply – something unthinkable just a few years ago. Digital Asset treasury firms also hold large supplies of Ethereum and Solana. But Cypherpunk is taking this strategy to a new level, betting that privacy will be a sought after feature in crypto as global surveillance heightens.
“Privacy’s become a rare, vanishing commodity,” Tyler Winklevoss posted on X. “We feel strongly that Zcash could become a meaningful percentage of Bitcoin’s market capitalisation just on the merits of it being a privacy hedge or insurance policy to Bitcoin’s transparency alone.”