TLDR:Security researcher Taylor Hornby discovered the Orchard circuit flaw on May 29, 2026, using Anthropic’s Opus 4.8 model.The bug allowed false elliptic curve multiplication inputs to pass verification, enabling unlimited counterfeit ZEC generation.Due to Orchard’s privacy design, there is no cryptographic proof whether the vulnerability was exploited before the fix.Shielded Labs is exploring a network upgrade with turnstile accounting to independently verify Zcash’s total supply integrity.Zcash founder Zooko Wilcox has disclosed a critical vulnerability in the protocol’s Orchard privacy pool that could have enabled unlimited counterfeit ZEC creation. Security researcher Taylor Hornby discovered the flaw on May 29, 2026, and immediately reported it to Zcash Open Development Lab. An ecosystem-wide emergency response was completed by June 2. Shielded Labs confirmed the bug was real and fully exploitable. ZEC is currently trading at $443.05, down 29.0% over the past 24 hours.Wilcox Reveals the Scope of the Orchard FlawWilcox, alongside Jason McGee and Taylor Hornby, published a detailed account of the vulnerability and the response it triggered. According to the disclosure, the flaw existed within an under-constrained element of the Orchard circuit. This allowed false inputs into elliptic curve multiplication while still passing the circuit’s verification checks.Hornby built a complete exploit and tested it in a local environment. The test confirmed that unlimited, undetectable counterfeit ZEC could be generated without triggering any alerts. Had the same tool run on Zcash mainnet, counterfeit ZEC would have appeared directly in a live wallet.The vulnerability was present from Orchard’s activation in May 2022 through June 1, 2026, a window of approximately four years. Wilcox acknowledged that due to Orchard’s privacy properties, there is no cryptographic method to confirm or rule out exploitation during that period. The team stated: “There is no definitive way to determine using only cryptography whether such exploitation occurred before the vulnerability was discovered and fixed.”Despite this uncertainty, Wilcox expressed measured confidence. He wrote: “We hired Taylor to find any vulnerabilities before the attackers, and that’s exactly what he did.” He cited the bug’s ability to evade years of scrutiny from leading cryptographers as further evidence that discovery required exceptional skill and tooling.Founder Outlines Path Forward for Zcash Supply IntegrityWilcox made clear that user trust should not rest on Shielded Labs’ assessment alone. The team stated: “We do not believe that users should rely on our assessment, or anyone else’s.” To that end, the organization is exploring a network upgrade designed to let anyone independently verify the integrity of Zcash’s total supply.The proposed upgrade would deploy a new shielded pool and enforce turnstile accounting on all coins currently held in the Orchard pool. This mechanism would allow the community to prove the non-existence of counterfeit ZEC within Orchard. A detailed follow-up post outlining the proposal’s mechanics and tradeoffs is expected the following week.Any network upgrade would require broad community support and must pass through Zcash’s standard governance process before activation. Wilcox noted that Shielded Labs is already accelerating its proactive security work, using state-of-the-art AI tools in partnership with Hornby and Anthropic. The team added: “We are doubling down on proactive security research, including using state-of-the-art AI tools, to find problems before the bad guys do.”Additional steps include a formal mathematical verification project targeting the Orchard circuit and open searches for a Head of Security and a Cryptographer. Wilcox credited ZODL, the Zcash Foundation, and the broader ecosystem for their swift response, stating Zcash is “well positioned to recover.”The post Zcash Founder Warns Orchard Bug Could Have Created Undetectable Counterfeit ZEC appeared first on Blockonomi.