Author: Damilare Damidez, Crypto Analyst

Compiled by: Felix, PANews

Summary:

Recently, there have been some inconsistent opinions in the crypto community regarding the reputation of on-chain detective ZachXBT. Some still view ZachXBT as a hero, while others believe that the "dragon slayer" ZachXBT has ultimately become the "evil dragon." In response, crypto analyst Damilare Damidez published an article supporting ZachXBT and revealing the truth behind the controversy.

Background

A few days ago, U.S. President Trump launched his meme coin $TRUMP, and his wife quickly followed with her own token. These events caused a significant stir in the market. Amid this meme frenzy, crypto trader Micki tweeted, "The busiest person in the crypto space for the next four years will be ZachXBT."

ZachXBT is a well-known blockchain investigator famous for collaborating with institutions to track fraud on the blockchain. In response to Micki's comments, ZachXBT made a "complaint," stating that he gained no rewards from it.

ZachXBT said, "One of my biggest regrets is not putting making money first." "I wasted time on things like this (helping recover funds), which brought me no return and only distorted my view of doing good."

"Additionally, a few months ago, the U.S. government was hacked, losing $20 million, and I personally helped recover a significant portion of those funds. But in the end, I received no reward."

Following these comments, a token named "Justice for ZachXBT" was issued, called ZACHXBT, created by degen traders. ZachXBT was airdropped 50% of the token supply (500,000 ZACHXBT).

In response, here's how ZachXBT operated:

Increased 50% liquidity:

ZachXBT added his airdropped tokens to a single-sided liquidity pool on Raydium. The market cap of the token skyrocketed from $5 million to $80 million within two hours.

One hour later, ZachXBT withdrew liquidity:

• Initially withdrew 1.7 million ZACHXBT and 340 SOL
• Later withdrew 89 million ZACHXBT and 15,771 SOL
• Total withdrawal: 91 million ZACHXBT and 16,111 SOL

The following diagram illustrates how single-sided pools and liquidity withdrawals work:

When you provide single-sided liquidity for a token on Raydium, the platform automatically uses the tokens you deposit to purchase an equivalent amount of paired tokens, such as SOL, creating a balanced LP token.

When removing liquidity, the fees you earn will automatically be accounted for in your share of the pool. This means:

• When you withdraw liquidity, you will receive your tokens (e.g., your tokens and SOL) along with the fees you earned in additional tokens
• These fees are paid in the two tokens of the trading pair (e.g., your tokens and SOL) based on the trading activity in the pool

Including donations, a total of 16,348 SOL (worth $3.87 million) was accumulated.

ZachXBT transferred the earned value of $3.8 million in 16,348 SOL to another wallet.

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ZachXBT then sent it to Wintermute.

Locked the liquidity pool:

Subsequently, ZachXBT locked the liquidity pool and added 96 million ZACHXBT to it.

Additional token sales: ZachXBT also received 50% of another token, CRIME, which he sold for $57,000 (still in the wallet).

Why were the tokens sold off?

The collapse of the token was not due to ZachXBT's actions, but rather due to FUD and traders' lack of on-chain knowledge. Once the news of liquidity withdrawal spread, many panicked and sold their held tokens.

Analysis

ZachXBT's actions demonstrate his sense of responsibility:

• He did not stop the project but increased liquidity, allowing others to trade
• The 10% withdrawal helped him gain economic benefits, which many believe he deserved
• The re-increase of liquidity showed no signs of struggle

The controversy mainly stems from misunderstanding rather than malice.

Conclusion

ZachXBT's handling of the $ZACHXBT token reflects a fair approach. The purpose of the token is to honor his contributions, and he earned profits without exploiting his influence.

ZachXBT remains a hero, not a villain. The market simply needs more education on on-chain mechanisms and liquidity dynamics.

Related reading: From Victim to Whistleblower: Exploring the Story of the Strongest Detective in the Crypto World, ZachXBT

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