Zano announced that a vulnerability in its Gateway Address system allowed an attacker to create 36.9 million ZANO tokens, as well as Freedom Dollar (fUSD) tokens, prompting the decision to roll back its blockchain by one month.
Exploit Details and Timeline
According to a post-mortem report published Thursday, the exploit began on August 29, when the attacker generated about 18.4 million ZANO in a single transaction. On September 25, the same vulnerability was used to mint an additional 18.4 million ZANO. Using the same exploit process, the attacker then created Freedom Dollar tokens. Some of these unauthorized tokens entered circulation within the broader Zano ecosystem.
The Zano team outlined that the attacker registered a Gateway Address on August 28, paid the standard registration fee of 100 ZANO—worth $553 at the time—and initially tested the exploit with a fabricated asset just before the first major unauthorized mint occurred.
Zano disclosed that, at first, the unauthorized token creation went unnoticed. The initial 18.4 million ZANO mint was undetected for nearly a month, as internal systems could not distinguish between genuine and fake tokens. The incident only surfaced when internal teams observed suspicious activity following a second exploit transaction.
Response and Blockchain Rollback
The scale of the attack led Zano to roll back about a month of blockchain history, impacting even legitimate transactions. Project leaders stated that this was their only viable option, as the fraudulent tokens were indistinguishable from authentic ones.
These coins functioned as authentic ZANO and could be spent normally, making detection impossible without a comprehensive rollback of the chain, according to the project’s post-mortem report.
The team acknowledged that the rollback would negatively affect community trust but emphasized its necessity to preserve the integrity of the ecosystem.
Zano also reported that previous security measures, including AI-based testing, internal code reviews, and bug bounty programs, had failed to identify the vulnerability in advance.
Restoration Plan and Exchange Coordination
In efforts to restore balances affected by the exploit and subsequent rollback, Zano revealed it would use resources from its developer fund, personal funds from team members, and committed contributions. The recovery process will primarily involve cooperation with exchanges and payment providers.
Exchanges have been instructed to replay customer withdrawals that were reversed by the blockchain rollback. The Zano team plans to credit affected deposits through a coordinated effort with these partners.
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Zano emphasized ongoing efforts to support affected users and to strengthen its security infrastructure to prevent similar incidents in the future.
