Company: ZCSH
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0000950170-25-035469
Chunk: 157

Company: Grayscale Zcash Trust (ZEC)
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1A
Chunk 157
---
 to the Blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down the Zcash Network. 

Moreover, because of the Zcash Network’s privacy-preserving features, it is possible that certain pools have exceeded in the past, or may exceed now or in Zcash’s future, the 50% threshold on the Zcash Network. As of the date of this Annual Report, there are no known reports of malicious activity on, or control of, the Zcash Network, and no mining pools on the Zcash Network are believed to 

54 

have exceeded the 50% hashrate threshold. However, because of Zcash’s privacy-preserving features, it is possible that certain mining pools have exceeded in the past, or may exceed now or in the future, the 50% threshold on the Zcash Network. The crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of ZEC transactions, and this risk is heightened if over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority. If network participants, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of ZEC mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Zcash Network will increase, which may adversely affect the value of the Shares.

For example, in August 2020, the Ethereum Classic Network was the target of two double-spend attacks by an unknown actor or actors that gained more than 50% of the processing power of the Ethereum Classic Network. The attacks resulted in reorganizations of the Ethereum Classic Blockchain that allowed the attacker or attackers to reverse previously recorded transactions in excess of $5.0 million and $1.0 million. Furthermore, on June 2, 2018, the Horizen Network, another zk-SNARKs-based protocol, was the target of a double-spend attack by an unknown actor that gained more than 50% of the processing power of the Horizen Network. The attack was the result of delayed submission of blocks to the Horizen Network. Any similar attacks on the Zcash Network could negatively impact the value of ZEC and the value of the Shares.

A malicious actor may also obtain control over the Zcash Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. The less that the ZEC ecosystem grows