Maelstrom Goes Full Stealth Mode: Dumps ZEC, Funds Bitcoin's Cloak & Dagger Devs 🕶️

Maelstrom, the family office of BitMEX co-founder Arthur Hayes, has shifted more of its crypto focus toward Bitcoin privacy, disclosing in its first annual report that two of the four developers funded through its Bitcoin Grant Program now work full-time on tools that make transactions harder to trace. The program has paid open-source developers in monthly Bitcoin installments under 12-month contracts since October 2024 and caps grant stacking at $400,000 a year, according to the fund. Developers Benalleng and Macgyver handle the privacy work, while Rkrux and Stratospher contribute to Bitcoin Core, the network's main software.

The two privacy projects attack traceability from different angles. One lets the sender and receiver jointly add inputs to a single transaction so it no longer resembles a standard payment, breaking common surveillance heuristics. The other lets recipients accept funds without reusing or publishing addresses. Vikrant Sharma, founder of Cake Wallet, said the wallet's Bitcoin Silent Payments and Payjoin v2 integration fills a gap Bitcoin left open. "People want to use Bitcoin on the go and they don't want to reveal their history and balances and all that. Bitcoin is open and permissionless but without privacy, it's a surveillance tool."

The grants land as Hayes confirmed Maelstrom has sold its entire position in Zcash [ZEC], one of the largest privacy tokens. He tied the exit to a vulnerability in Zcash's Orchard pool that could have allowed counterfeit ZEC to be minted undetected. Hayes said he viewed actual minting as unlikely but could not cryptographically rule it out, and he left the door open to re-entry. "We [Maelstrom] will consistently re-evaluate our thinking and if my assumptions are proven incorrect, will rebuy, hopefully at lower prices."

The same push is reshaping other chains. Helius's acquisition of Light Protocol aims to build a programmable, fully on-chain privacy layer for Solana, covering encrypted balances and payments for both retail and institutional users. Privacy tokens remain a fraction of the broader market, with a combined capitalization near $51 billion led by Zcash [ZEC], Monero [XMR], and Dash [DASH], and press-time trading volume of $3.3 billion.