Bootstrap, the nonprofit that supports the privacy-focused cryptocurrency Zcash, said a recent governance dispute that led to the departure of key board members stemmed from the legal limits nonprofits face when seeking outside investment.
The comments follow the decision by the Electric Coin Company, the main development team behind Zcash (ZEC), to separate from Bootstrap and form a new company. ECC cited concerns over what it described as “malicious governance actions,” Cointelegraph reported Thursday.
In its official response, Bootstrap said the board members engaged in discussions regarding “external investment and alternative structures to privatize” Zashi, the self-custodial crypto wallet built for private Zcash transactions.
The board discussed “external investment and alternative structures to privatize Zashi, while working with legal counsel to ensure any path forward would comply with U.S. nonprofit law, remain consistent with the long-term mission of Zcash, and not jeopardize the broader Zcash community,” according to an announcement shared by board member Zaki Manian on Thursday.
Zashi was developed by ECC and launched on mobile platforms in early 2024. Its source code is publicly available, reflecting Zcash’s open-source model, under which no single entity owns or controls the protocol.
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Bootstrap said the core disagreement stems from its fiduciary and legal obligations as a nonprofit organization registered under section 501(c)(3) of the US tax code.
The proposed deal could bring “new vulnerabilities for politically-motivated attacks on Zcash,” including a potential lawsuit from donors leading to unwinding the transactions, meaning that Zashi would be “transferred back to ECC,” the statement says.
Bootstrap added that these factors “jeopardize the entire Zcash ecosystem” and such transactions must be done “carefully” to ensure these assets will “serve the public good,” and not be “captured for private benefit.”
Zcash’s code is also public and open-source, and no single company or entity owns the protocol.
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For-profits can attract “large amount” of external capital for Zcash, says Bootstrap
While emphasizing that the dispute was not about Zcash’s mission, Bootstrap acknowledged that operating under a nonprofit structure can limit access to capital.
The board members further added that access to external investment could bring more funds into the Zcash ecosystem:
“There is nothing wrong with for-profits, and such a project done well can be an excellent way to bring a large amount of outside capital into making Zcash and privacy great and user-friendly.”
Cointelegraph reached out to ECC and Bootstrap for more details regarding the external investment and internal split but had not received a response by publication.
The ZEC token fell by around 16% over the past 24 hours, to trade above $406 at the time of writing, according to crypto intelligence platform Nansen.
At the same time, large holders increased their exposure, with so-called whales buying nearly $914,000 worth of ZEC during the period, while newly created wallets accumulated about $1.74 million.
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