Pirate Chain said it discovered a transaction validation flaw in its source code on Oct. 14 that allowed roughly 39.8 million ARRR to be created without authorization, lifting the token’s total supply by about 20%. The newly minted coins were then moved into the Sapling privacy pool, according to the project’s incident update released on Oct. 16.
NonKYC later detected suspicious deposits tied to the incident, restricted the related accounts and blocked withdrawals. Pirate Chain said the exploit relied on two validation failures working together: one bypassed the inflation check, while the other involved an error in parsing output scripts.
As a voluntary precaution, dPoW (Delayed Proof of Work) operators agreed to temporarily halt notarization services. The team also asked exchanges and mining pools to voluntarily pause related operations while a recovery plan is being prepared. Pirate Chain said the network remains operational and that it is investigating the matter while working with other communities on a solution.
Pirate Chain said in an incident update that a transaction validation vulnerability found in its source code on Oct. 14 allowed about 39.8 million ARRR to be created without authorization, increasing the token’s total supply by roughly 20%.
The newly generated tokens were then transferred into the Sapling privacy pool.
NonKYC later detected suspicious deposits, restricted the related accounts and blocked withdrawals.
Two validation failures were involved
According to Pirate Chain, the exploit combined failures in two separate validation steps. One bypassed the inflation check, and the other stemmed from an error in parsing output scripts.
dPoW operators paused notarization voluntarily
As a voluntary precaution, dPoW (Delayed Proof of Work) operators reached consensus to temporarily stop notarization services. The team also asked exchanges and mining pools to voluntarily suspend related operations while a recovery plan is being developed.
Pirate Chain said the network remains operational. The team is still investigating the incident and working with other communities to develop a solution.
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