Overview
- Security researcher Taylor Hornby found the flaw on May 29, 2026, in the Orchard zero-knowledge circuit that could have let someone create undetectable counterfeit ZEC.
- Teams executed a two-step emergency response that first disabled Orchard via a soft fork and then deployed a hard-fork upgrade (NU6.2) to install a corrected circuit and re-enable shielded transactions.
- Project leads report the protocol’s turnstile accounting shows no on-chain evidence of unauthorized coins after the fix, but Orchard’s privacy guarantees make absolute cryptographic proof impossible.
- Markets reacted sharply after public disclosure, with ZEC falling roughly 30–50% and high-profile exits such as Arthur Hayes selling his full position.
- Shielded Labs and other developers are proposing follow-up measures — a new shielded pool with enforced turnstile checks, formal verification of circuits, and governance votes — to restore verifiable supply integrity.