Bybit Hit with $60 Million Loss in ZKJ Crash: Largest Casualty as Polyhedra's Past Controversies Surface

The ZKJ token saga, native to the Polyhedra Network, continues to dominate crypto headlines with fresh revelations about its financial toll and the project’s murky origins.

Following our initial report on the token’s 83% plunge tied to Binance Alpha’s liquidity crisis and a subsequent rebound fueled by Polyhedra’s buyback promises. New findings now spotlight Bybit’s $60 million loss and the troubling backstory of Polyhedra’s leadership.

Bybit Bears the Brunt: $60M Loss in ZKJ Crash

Crypto analyst @cryptobraveHQ has revealed that Bybit, a major cryptocurrency exchange, suffered losses exceeding $60 million during the ZKJ token’s recent crash, positioning it as the largest victim and a key target in an alleged market manipulation scheme.

Bybit’s insurance fund, a reserve to cover liquidation losses, dropped from $407 million on June 14 to $346 million by June 16—a $61 million decline coinciding with the ZKJ-USDT perpetual contract’s open interest crashing from $200 million to $7.7 million (a 96% drop) within 24 hours. Liquidations hit $89 million in a single hour, totaling $100 million over the period, with Bybit accounting for 90% of the damage.

The crash, detailed as a liquidity wipeout linked to Binance Alpha’s speculative frenzy, appears to have been exacerbated by a coordinated attack. Sources suggest this was a deliberate “harvest” operation, exploiting Bybit’s high-liquidity contract market and insurance fund.

Bybit has since delisted the ZKJ trading pair, a move analysts see as a desperate bid to stem further losses.

Polyhedra’s Past: A Tale of Deception and Ambition

The roots of this chaos lie in Polyhedra’s contentious history, as exposed by @cryptobraveHQ. Founded by CEO Abner Jia (His chinese name: Yongzheng Jia), a Tsinghua University graduate, Polyhedra builds on the ruins of Jia’s prior ventures, Ever Chain and Findora.

Findora, backed by Polychain Capital, raised over $20 million from the Chinese community but fizzled out as the team cashed out post-OKX listing—a pattern that echoes in Polyhedra’s trajectory.

Jia, alongside advisor Lily Chao, recruited a prestigious team from the University of California, Berkeley, leveraging the zkBridge paper, “Trustless Cross-chain Bridges Made Practical,” co-authored by professor Dawn Song—known as the “Godmother of Computer Security”—and her students, including Polyhedra’s CTO Tiancheng Xie and chief scientist Jiaheng Zhang.

However, Jia, not a Song student, allegedly misrepresented his credentials to secure VC backing, prompting Song’s public disavowal.

Pre-token generation event (TGE), Polyhedra suffered two hacks, losing nearly $10 million in liquidity provider assets. At launch, the team dumped tokens to offset losses, failing to yield significant profits.

Despite a $1 billion valuation and $75 million in funding from Binance Labs and Animoca Brands, Jia and Chao are now accused of orchestrating the crash to exploit the Binance Alpha+Bybit opportunity.

Community Analysis

A summary from @LNudt offers additional perspective:

• Biggest victim: Bybit, lost $60 million from its contract insurance fund.

• Collateral victim: Binance, suffered damage to its Alpha reputation.

• Biggest beneficiaries: ZKJ project’s actual controllers, Abner and Lily couple.

• Collateral beneficiaries: OKX, profited as funds moved through its channels, impacting Bybit and Binance.

• Other related parties:

  • KOGE’s old team collaborated with Abner and Lily, withdrawing liquidity for small gains.

  • ZKJ’s CTO Tiancheng Xie, a technical figure with little operational influence, earned minor profits but lost credibility.

Path Forward

The crypto community demands accountability from Polyhedra’s leadership and stronger safeguards from exchanges like Bybit.

Is it truly the result of Abner Jia’s year-long strategy? As investigations deepen, this saga highlights the perils of hype-driven projects and the fragility of market trust. Stay tuned for further updates on Blockflow News.