A transaction validation vulnerability in Pirate Chain source code allowed the unauthorized creation of approximately 39.8 million ARRR, increasing the total supply by about 20%. The newly minted funds were transferred into the Sapling shielded pool. NonKYC identified suspicious deposits, restricted the associated accounts, and blocked withdrawals. The exploit combined two validation failures: bypassing the issuance check and incorrect interpretation of the output scripts. dPoW operators suspended notarizations as a precaution, and exchanges/pools were asked to pause operations while a recovery plan is developed.