Canary Capital CEO reignites privacy coins debate with sharp Zcash rug pull warning

A prominent fund manager has reignited the privacy coins debate, using the phrase Zcash rug pull while arguing that Litecoin offers a more compliant path to transactional privacy.

Steven McClurg attacks Zcash rally, backs Litecoin instead

Canary Capital CEO Steven McClurg has sharply criticized the recent surge in Zcash (ZEC), describing the move as a “pump and dump” that has now been “rug-pulled.” However, he simultaneously positioned Litecoin (LTC) as his preferred privacy asset for use in regulated markets such as the US and UK.

In a series of posts on X, McClurg said the Zcash rally that started roughly two months ago “triggered my curiosity.” After revisiting the project for the first time since 2016–2017, he wrote that he initially “bought into the Zcash narrative” but later changed his view.

According to McClurg, “Litecoin has broader reach in terms of users, and MWEB an easier tool for selecting private wallets/transactions. It is my choice for privacy in US or UK due to compliance.” Moreover, he contrasted that stance with a blunt warning: “ZEC is a pump and dump getting ready to rug-pull. Be careful out there,” he posted last week.

Zcash price crash sparks talk of market stunt

Following those initial comments, McClurg highlighted Zcash’s sharp reversal in a follow-up post on X. “Zcash [is] down 50% since this post. I hope people saw the post survived the rug pull. There is still further down to go,” he wrote, implicitly framing the move as a zcash rug pull event.

He attributed the heavy selloff to “a stunt by bad actors,” though he did not identify specific counterparties, exchanges or trading structures. That said, his language clearly centered on market behavior and trading dynamics rather than any alleged flaws in Zcash’s underlying protocol or cryptography.

Despite the harsh characterization of the recent trading pattern, McClurg stressed that his critique is not aimed at Zcash as a technological innovation. “Btw, I have nothing against ZEC, as it was the first currency with private/public option,” he said, underscoring that he still recognizes its pioneering role in on-chain privacy.

Why Litecoin is McClurg’s preferred privacy coin

The key distinction for McClurg lies in how different networks implement privacy and how that interacts with regulatory compliance. In his view, Litecoin’s architecture gives it an edge as a litecoin privacy tool for users operating within strict legal frameworks such as the US or UK.

Litecoin’s MimbleWimble Extension Block (MWEB) adds an optional confidential layer that runs alongside the transparent base chain. Moreover, this design allows users to move coins into a separate privacy domain while keeping the total supply auditable on the main chain, a feature that can be critical for regulators and exchanges.

McClurg argued that this structure, combined with Litecoin’s broader user base and strong exchange support, underpins his view that LTC is “my choice for privacy in the US or UK.” In practice, he suggests that MWEB strikes a balance between individual confidentiality and systemic transparency that is more aligned with current compliance expectations.

Monero, authoritarian regimes and compliance tensions

Pressed by followers about Monero, McClurg acknowledged that he has not researched the asset “in several years.” However, he said that based on earlier work he “always felt that it would be the winning currency for people in authoritarian regimes. Pure privacy.”

He added that Monero is “unfortunately likely not compliant for US citizens (not that it shouldn’t be),” neatly capturing the friction between default privacy and prevailing regulatory norms. Moreover, that assessment helps explain why he separates the use cases for different privacy coins across jurisdictions with very different rulebooks.

Despite his recent market warnings, McClurg still places Zcash within a broader bullish view on privacy technologies. In the same thread he described himself as “longterm bullish on Litecoin, Monero, Dash, and Zcash in that order,” putting ZEC last in his personal ranking but firmly keeping it in his long-term privacy basket.

Positioning Zcash among privacy chains

Zcash, with its dual transparent and shielded address system, has historically occupied a middle ground between fully transparent assets like Bitcoin and fully private currencies such as Monero. However, McClurg’s comments suggest that his current concerns stem from how the market trades ZEC rather than from its cryptographic design.

He implied that the recent ZEC rally and subsequent crash reveal structural weaknesses in the trading environment surrounding the token. Moreover, he warned that speculative excess, alleged manipulation and aggressive leverage can overshadow genuine innovation in privacy-preserving technology.

Even so, McClurg was careful to reiterate that he does not want the latest volatility to undermine the broader push for financial privacy on public blockchains. He explicitly expressed hope that “this stunt by bad actors didn’t damage the importance of privacy chains and privacy features,” emphasizing that his criticism is directed at market conduct, not at the concept of privacy-focused networks.

Privacy coins debate and market impact

McClurg’s intervention has injected fresh energy into the ongoing privacy coins debate, especially around how compliant privacy can be achieved on open networks. His ranking of Litecoin, Monero, Dash and Zcash highlights how different design choices map onto varied regulatory and geographic realities.

Regulators in the US and UK continue to scrutinize privacy-enhancing technologies, often focusing on issues such as anti-money laundering and sanctions evasion. However, advocates like McClurg argue that privacy tools, when combined with transparent supply and robust oversight, can coexist with regulatory objectives rather than undermine them.

At the same time, the latest ZEC volatility may reinforce concerns among traders and policymakers about concentration of liquidity, potential wash trading and the risk that thin markets can be moved by “bad actors.” Moreover, such episodes can shape how institutions evaluate counterparty risk when they consider listing or supporting privacy-focused assets.

Zcash market snapshot

Despite the steep pullback highlighted by McClurg, Zcash remains a reference point in discussions about cryptographic privacy and selective disclosure. At press time, ZEC traded at $324, a level that reflects both its legacy as an early privacy leader and the renewed scrutiny around its recent price swings.

Looking ahead, the reaction to McClurg’s remarks from traders, developers and regulators will help determine whether the latest turbulence is seen as an isolated episode or a symptom of deeper structural issues in privacy-coin markets. That said, his comments underline a central tension: how to preserve user confidentiality while satisfying increasingly demanding compliance requirements.

In summary, McClurg’s critique reinforces that privacy-focused cryptocurrencies remain at the center of a complex conversation about technology, regulation and market integrity, even as investors weigh the risks and potential rewards of this evolving sector.