Zcash (CRYPTO: ZEC) crashed as low as 50% over the past 36 hours after Shielded Labs disclosed a critical vulnerability allowing unlimited counterfeit ZEC creation—a bug sitting undetected for four years until Anthropic’s Claude AI found it.

Security Engineer Used Claude Opus 4.8 To Find The Bug On May 29

On May 29, Shielded Labs security engineer Taylor Hornby discovered the Orchard circuit vulnerability using Anthropic’s newly released Opus 4.8 model and immediately shared findings with engineers at the Zcash Open Development Lab.

The flaw made it possible to mint counterfeit ZEC that would be completely undetectable within the shielded pool.

“Taylor, with the help of Opus 4.8, wrote a complete exploit which, when he tested it in a local regtest environment, generated unlimited, undetectable counterfeit ZEC,” Shielded Labs wrote. 

The bug has been present since Orchard’s activation in May 2022 and was patched on June 1.

Actual Exploitation Is Unlikely But Can’t Be Confirmed

Shielded Labs said the team is not “overly concerned” that counterfeiting occurred before the fix, noting the vulnerability went undetected for years even under scrutiny from the world’s best cryptographers. 

However, the privacy properties of the Orchard pool make it impossible to definitively rule out exploitation.

In response, Shielded Labs is exploring a network upgrade that would allow anyone to verify the integrity of the entire Zcash supply and prove no counterfeit coins exist in the Orchard pool. 

The proposal would also deploy a new shielded pool and enforce turnstile accounting on all existing Orchard coins.

ZEC Chart Shows $250 Trendline Absorbed The Crash Wick

ZEC is down 25% on the day after intraday wick reached $250 before recovering. The single candle wiped out months of gains from the March to May rally that peaked near $700. 

Every EMA now sits overhead as resistance between $366 and $538.

RSI sits at 34.35 with a bull divergence signal near oversold territory. 

Holding above $300 and reclaiming the 200 EMA at $366 targets $429. Losing $250 on a daily close opens capitulation toward $200 then $150.

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