Written by: KarenZ, Foresight News

After achieving a 1200% increase in 2025 and witnessing a full-scale revival of privacy technology, Zcash stumbled badly in the quagmire of governance.

On January 8, 2026, Josh Swihart, the former CEO of Electric Coin Company (ECC), the core development team of Zcash, announced that the entire ECC team was forced to resign.

This is not layoffs, not restructuring, but a complete "mass exodus." As a result, the price of ZEC fell by 20% in a short period, briefly dropping below $400, before rebounding to above $440.

Who is being targeted?

According to Josh Swihart, this mass resignation was not voluntary, but rather a passive "constructive dismissal." This is a legal term that refers to an employer creating a hostile or intolerable work environment, or exerting other forms of pressure or coercion, forcing employees to leave or resign.

Josh Swihart directly targeted Bootstrap, a nonprofit organization established under U.S. 501(c)(3) that supports Zcash by managing the Electric Coin Company.

Let's first explain the core attributes of 501(c)(3) organizations. These organizations are tax-exempt nonprofits recognized by the IRS, primarily established for specific public purposes such as religion, charity, education, science, and literature. Their income is exempt from federal income tax, and donations to them are tax-deductible. Crucially, these organizations must adhere to strict regulations and are prohibited from distributing profits to individuals.

"Over the past few weeks, a majority of the Bootstrap board members have clearly deviated from Zcash's core mission. They unilaterally altered our employment terms, making it impossible for us to fulfill our job responsibilities," Josh Swihart defined this series of actions as malicious governance sabotage. He also announced that, in order to protect the team's research and development achievements and uphold Zcash's original mission, the original ECC team plans to establish an independent new company to continue advancing technology development.

The flashpoint: the privatization of the Zashi wallet

What exactly triggered this governance crisis?

Bootstrap's board of directors subsequently responded, clarifying that the core disagreement lay in the privatization versus commercialization of the Zashi wallet—Zcash's flagship mobile wallet, Zashi was developed in-house by ECC, and the two sides had irreconcilable differences regarding its future direction.

The ECC team advocated privatizing the Zashi wallet, introducing external capital, and adopting a more flexible commercial architecture to accelerate technological iteration and ecosystem expansion. However, this plan was strongly opposed by the Bootstrap board, which believed it posed significant legal risks.

From a non-profit organization's perspective, Bootstrap emphasizes that all its assets (including Zashi-related intellectual property) must serve the public interest and must not be appropriated or transferred by private entities. If privatization proceeds, entities that previously donated to Bootstrap may file lawsuits for "improper asset disposal." The board also cited the case of OpenAI, whose transition from a non-profit to a for-profit structure triggered numerous lawsuits and regulatory investigations—a cautionary tale that should not be ignored.

Essentially, the core of this contest is a clash of two philosophies: ECC views the nonprofit structure as a "shackle" that restricts innovation and commercialization, and desires a freer entrepreneurial space; while Bootstrap believes it is fulfilling its legal responsibility to protect public assets from private acquisition and prevent legal and political risks.

Opportunities and Confusion for a New Company

On January 9, Josh Swihart announced that the original ECC and Zashi development team will launch a new Zcash wallet, "cashZ," based on the Zashi codebase. He also promised that the original team will focus 100% on the development of the Zcash protocol and will not issue any new tokens.

The official website of cashZ clearly states the three core principles behind the new company's establishment: upholding Zcash's cypherpunk origins, reshaping the consistency of ecosystem development, and promoting the large-scale implementation of privacy technologies. Josh Swihart, by repeatedly emphasizing the "cypherpunk spirit" and "privacy rights," positions his team as defenders of idealism.

This could be an opportunity, but it also carries hidden risks. The opportunity lies in the fact that, freed from the constraints of a non-profit organization, the new team can flexibly raise funds, make quick decisions, and boldly advance its commercialization strategy without having to compromise due to the board's risk aversion.

But the challenges are equally daunting: How can the new company's funding be secured? How should its legal relationship with the Zcash protocol be defined? And how can the community's trust in the team be rebuilt? These questions all require time to answer.

How do the relevant parties view this?

Most intriguing is the statement from Zcash co-founder Zooko Wilcox. This legendary figure, who stepped down as CEO of ECC at the end of 2023, chose an extremely subtle neutral stance. His statement seems to indicate that he is not taking sides. This may not be a simple black-and-white issue, but rather an inevitable eruption of structural contradictions.

On January 9th, the Zcash Foundation issued a statement reaffirming its commitment to maintaining Zcash as a decentralized open-source protocol. It emphasized that regardless of organizational changes, Zcash's network, user assets, and privacy features will remain unaffected. This statement is wise. In times of crisis, reaffirming the protocol's decentralized nature is more effective in stabilizing community confidence than getting embroiled in organizational disputes.

Sean Bowe, a former ECC engineer who left the organization a year ago, stated that the ECC is regrouping under a new architecture. This will free it from the constraints of Bootstrap's fragmented and misaligned nonprofit structure, allowing it to continue building for Zcash. The potential within this is enormous.

summary

Zcash's turbulent start to 2026 serves as a mirror for the entire industry.

This reminds us that while protocols can be decentralized, the organizations that maintain them are often not, or find it very difficult to, do so. We still haven't found a perfect model that can simultaneously accommodate "the ideal of decentralization, the vitality of innovation, legal compliance, and sustainable funding."

The crypto industry continues to explore its way forward amidst the tug-of-war between ideals and reality, the balance between innovation and compliance, and the struggle between freedom and responsibility.