Foreign media reports that Zcash recently patched a major vulnerability in Orchard privacy pools, but the market sell-off has not eased. The reason is not whether the vulnerability has been patched, but rather that the network cannot prove that this flaw has never been exploited in the past four years, thus casting doubt on the credibility of the supply.

This commentary argues that this incident exposes not just a single software problem, but a long-standing challenge for privacy coins: the more difficult it is for transactions to be audited externally, the harder it is to independently verify the integrity of the supply. For networks that rely on privacy protection, this ambiguity itself will be reflected in the price.

The vulnerability could lead to the forgery of ZEC.

The problem lies with Orchard, the core privacy pool in Zcash's shielded transaction system, used to hide addresses and transaction amounts. According to Shielded Labs, this circuit flaw could theoretically allow attackers to generate additional ZECs undetected, with no upper limit on the number.

Security researcher Taylor Hornby discovered the issue on May 29, 2026. The report mentions that he used AI-assisted tools during a targeted audit of Orchard circuitry and verified its feasibility in a local testing environment. The development team then quickly moved forward with a fix.

• Vulnerability discovered on: May 29, 2026
• Emergency hard fork completion date: June 1, 2026
• Affected module: Orchard privacy pool circuit

The market still plummeted after the repairs were completed.

Within days of the disclosure, the developers shut down the at-risk component and redeployed the patched circuitry via an emergency hard fork. By typical security incident handling standards, the response was not slow, and no funds were found to have been stolen, nor were there any clear signs of inflation detected.

However, the commentary points out that the market's real concern is "what happened in the past," not "whether it has been fixed in the future." Since Orchard has been operational since May 2022, this means the vulnerability has been lurking in the network for approximately four years. Zcash can confirm that the patch has been applied, but it cannot cryptographically prove that no one has exploited this flaw during those four years.

The report noted that ZEC briefly rose above $600 on the week the vulnerability was discovered, but fell back by about 45% to around $314 after the disclosure, resulting in a market capitalization loss of over $3 billion. The article also stated that BitMEX co-founder Arthur Hayes sold all his ZEC holdings after the news broke, further amplifying the market's sensitivity to supply issues.

The conflict between privacy and auditability is amplified once again.

The article argues that the reason this incident has caused such a lasting impact is because Zcash's privacy design itself limits external auditing capabilities. With transparent blockchains like Bitcoin, outsiders can directly verify the public ledger to check for anomalies in the total supply; however, in a shielded transaction pool, addresses and amounts are hidden, making it difficult for outsiders to draw the same direct conclusions.

This is also a trade-off that privacy coins have long faced: stronger privacy protection often means weaker independent auditing capabilities. The article states that this is not a problem that can be completely solved with a single patch, but rather a reality that privacy-oriented networks must confront in their design.

Shielded Labs is currently pushing for formal verification of Orchard circuits and proposing solutions for subsequent network upgrades, including the introduction of new shielded pools and the use of "turnstile" accounting to track the flow of funds out of existing Orchard pools, with the goal of improving supply verifiability while preserving privacy features.

If this solution is implemented, it could provide a reference model for privacy coins to handle supply auditing issues. However, before that, the market still needs to digest a more direct fact: the fact that the vulnerability has been fixed does not mean that historical risks have been completely eliminated.