On-Chain Detective ZachXBT and the $3.9 Million Meme Coin: The Dragon Slayer Becomes the Dragon?
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On-Chain Detective ZachXBT and the $3.9 Million Meme Coin: The Dragon Slayer Becomes the Dragon?
ZachXBT may not be the "dragon" people think he is; the market simply needs more education and awareness about on-chain mechanisms and liquidity dynamics.
Navigating Web3 tides with focused insightsWritten by: Damilare Damidez, Crypto Analyst
Translated by: Felix, PANews
Recently, opinions within the crypto community about on-chain investigator ZachXBT have become divided. While some still regard ZachXBT as a hero, others claim the "dragon slayer" has finally become the "dragon." In response, crypto analyst Damilare Damidez published an article in strong support of ZachXBT, revealing the truth behind the controversy.
Background
A few days ago, former U.S. President Trump launched his meme coin $TRUMP, followed shortly by his wife launching her own token. These events caused significant market excitement. Amid this meme frenzy, crypto trader Micki tweeted: "The busiest person in crypto over the next four years will be ZachXBT."
ZachXBT is a renowned blockchain investigator known for collaborating with institutions to track fraud on the blockchain. In response to Micki’s comment, ZachXBT expressed some frustration, noting he received no compensation from such efforts.
ZachXBT stated: "One of my biggest regrets is not prioritizing making money earlier." "I’ve wasted time on things like helping recover funds, which brought me no returns and only distorted my perception of doing good."
"Additionally, months ago when the U.S. government was hacked and lost $20 million, I personally helped recover a significant portion—but ultimately received no reward."
Following these remarks, a token titled “Justice for ZachXBT” was launched—named ZACHXBT—created by a degen trader. ZachXBT was airdropped 50% of the token supply (500,000 ZACHXBT).
Here's how ZachXBT responded:
Added 50% liquidity:
ZachXBT deposited his airdropped tokens into a single-sided liquidity pool on Raydium. The token’s market cap surged from $5 million to $80 million within two hours.
One hour later, ZachXBT removed liquidity:
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Initially withdrew 1.7 million ZACHXBT and 340 SOL
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Later withdrew 89 million ZACHXBT and 15,771 SOL
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Total withdrawal: 91 million ZACHXBT and 16,111 SOL
The diagram below illustrates how single-sided pools and liquidity withdrawals work:
When you provide single-sided liquidity for a token on Raydium, the platform automatically uses your deposited tokens to purchase an equivalent amount of the paired token (e.g., SOL) from the pool, creating a balanced LP position.
When removing liquidity, the fees you’ve earned are automatically credited to your share in the pool. This means:
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Upon withdrawing, you receive your original tokens (e.g., your token and SOL), plus the fees earned as additional tokens
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Depending on trading activity in the pool, these fees are paid in both assets of the trading pair (e.g., your token and SOL)
Including donations, the total amounted to 16,348 SOL (worth $3.87 million).
ZachXBT transferred the 16,348 SOL worth ~$3.8 million earned to another wallet:
FjQBfqpcgsrH4tG2Gpa6pDNoGT6fCwEvinMvVcK7ZxSG
He then sent it to Wintermute.
Locked the liquidity pool:
Subsequently, ZachXBT locked the liquidity pool and added 96 million ZACHXBT to it.
Additional token sale: ZachXBT also received 50% of the CRIME token supply, which he sold for $57,000 (the proceeds remain in his wallet).
Why did the token collapse?
The token’s crash wasn’t due to ZachXBT’s actions, but rather misinformation (FUD) and traders’ lack of on-chain knowledge. Once news spread that liquidity was withdrawn, many panicked and dumped their holdings.
Analysis
ZachXBT’s actions demonstrate responsibility:
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Instead of halting the project, he added liquidity, enabling others to trade
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Withdrawing 10% provided him economic benefit, which many believe he deserved
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Re-adding liquidity showed no sign of conflict or exploitation
The controversy stems largely from misunderstanding, not malice.
Conclusion
ZachXBT’s handling of the $ZACHXBT token reflects a fair and reasonable approach. The token was created to honor his contributions, and he profited without exploiting his influence.
ZachXBT remains a hero, not a villain. The market simply needs better education on on-chain mechanisms and liquidity dynamics.
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