Zcash internal conflict: Struggle for the future of privacy

​Since its launch, Zcash has positioned itself as a benchmark for privacy in the cryptocurrency world. Zero-knowledge proofs, academic rigor, and high ethical ambitions all helped create the image of a project standing above short-term speculation. Yet over time, these very ambitions became the source of a deep internal conflict that now threatens not only Zcash’s development but its very existence.

What made Zcash special from the start

Zcash emerged as a scientific project. Its technological foundation, zk-SNARKs, was developed with the participation of leading cryptographers and addressed a fundamental problem of public blockchains: transparency that destroys privacy. Unlike Monero, which chose the path of radical anonymity, Zcash adopted a compromise approach from the beginning: private transactions exist, but they are optional; the protocol is open; and development is conducted publicly.

This approach was closely tied to Zcash’s governance model. It was neither built as a classic startup nor structured as a DAO. Instead, it existed within a complex framework of several organizations, each with its role and its constraints.

How Zcash governance was structured

A key role in the protocol’s development was played by the Electric Coin Company (ECC). The ECC team was responsible for major upgrades, the technical roadmap, and the practical implementation of the ideas embedded in the protocol. Alongside it operated the Zcash Foundation, an independent nonprofit organization intended to represent the community’s interests, fund research, and serve as a guarantor of decentralization.

Above ECC in legal terms stood another entity, Bootstrap, a nonprofit organization with 501(c)(3) status, which owns the company and oversees it from a legal and fiduciary perspective. Over time, this is where tension began to accumulate. What was designed as a system of checks and balances gradually turned into a conflict between development speed and legal caution.

What exactly happened

The crisis became public after the entire Electric Coin Company team announced its departure from the project and its intention to form a new company. Former ECC CEO Josh Swihart stated explicitly that this was not a voluntary decision but a case of so-called constructive discharge. This is a situation where working conditions change so significantly that continuing to work becomes impossible without compromising professional and ethical integrity.

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According to Swihart, decisions made by the Bootstrap board effectively blocked ECC’s ability to fulfill its original mission. He emphasized that the Zcash protocol itself was not affected and continues to operate and that the team’s departure was an attempt to protect their work from governance actions they consider destructive.

The core of the conflict

At the center of the dispute were ECC’s restructuring, the search for external funding, and the potential privatization of the Zashi wallet. For the development team, this appeared to be a logical step: in their view, Zcash cannot scale to billions of users while remaining confined within slow and restrictive nonprofit structures. This is why ECC effectively proposed a move toward a startup-style model.The Bootstrap board saw significant risks in this approach. In its statement, it emphasized that the proposed deals could violate U.S. nonprofit law, create grounds for lawsuits from donors, and expose Zcash to politically motivated attacks.

Additionally, there was a risk that if legal issues arose, the transaction could be reversed and assets returned to ECC, further complicating the situation.

The conflict gained additional weight from the fact that Josh Swihart became CEO of ECC only in 2023, following the departure of one of Zcash’s founders, Zooko Wilcox. Even then, Wilcox hinted at disagreements between management and governance structures. After the current escalation, he distanced himself from the situation, stressing that he was not involved in the conflict and describing members of the Bootstrap board as people of high integrity.

At a certain point, according to Swihart, governance decisions by the Bootstrap board led to changes in conditions under which the ECC team could no longer continue working within the company. This violated their understanding of the mission and professional responsibility. This, he claims, was the direct cause of the mass departure from the Electric Coin Company.

Community reaction and the state of the network

The Zcash Foundation promptly addressed the community, emphasizing that Zcash remains a decentralized, open-source protocol not controlled by any single organization. The network continues to operate normally: blocks are produced, transactions are processed, and user privacy is not under threat.

However, market behavior and on-chain analytics tell another side of the story. The price of ZEC dropped sharply, and according to Santiment, developer activity on the network fell to its lowest levels since 2021.

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The cashZ wallet as a point of no return

Following the mass exit from the Electric Coin Company, the former development team announced the creation of a new company and the launch of its own Zcash wallet, cashZ. It is built on the same codebase as Zashi and is positioned as a direct alternative to the official wallet around which the key disputes revolved. Users are promised an easy migration, with launch planned for the coming weeks.

This step has definitively moved the conflict into the practical realm. The team is not trying to change the protocol or fight for control over the network, it is simply taking the product and stepping away from institutional governance. Zcash as a blockchain continues to function, but the surrounding ecosystem is beginning to fragment. And this fragmentation becomes the main outcome of the internal split.