The privacy-focused Zano network has detailed a one-month network rollback following an exploit that resulted in the unauthorized minting of over $250 million in fake assets. According to the project team's post-mortem report, the attacker generated 36.89 million ZANO tokens and $18.45 million in Freedom Dollar (fUSD) stablecoins.
During late August and September—the period when the hack occurred and was detected—ZANO traded at an average price between $6.50 and $7.50. Based on an average price of $7.00, the minted tokens accounted for approximately $250 million in counterfeit value.
Prior to the breach, the algorithmic stablecoin fUSD had a circulating market supply of 12 million tokens. The creation of 18.45 million fake fUSD increased the supply by 153%, or 2.5 times the base circulation. Similarly, the circulating supply of ZANO stood at about 15.44 million before the exploit, and the addition of 36.89 million fake tokens inflated the supply by 240%.
Root Cause and Privacy Features
Zano is a privacy-focused network comparable to Zcash. To scale adoption and integrate with external exchanges and platforms, the network introduced the Gateway Address feature via Hard Fork 6 in late August, designed to allow external venues to track transferred and spent amounts.
However, a code error resulted in missing verification for Zano transactions, enabling the attacker to hide extra tokens and mix them with legitimate supply. Because the transfers were private, tracing the fake assets proved extremely difficult. Once created, the exploited ZANO and fUSD coins were indistinguishable from any other private ZANO output, which the team described as "privacy working as intended" since no one could accurately determine the affected outputs.
Recovery and Market Impact
To resolve the severe inflation issue, the project team opted to roll back the network by a month, a step that erased the $250 million exploit. The team stated that network recovery is stable and ongoing, and they plan to re-examine the Gateway Address feature in the future to help facilitate broader exchange integration.
Despite the recovery efforts, the ZANO token traded near $5—a key second-half support level—reflecting lingering investor uncertainty following the security incident.
