This has happened in several sandbox games since I installed 1.11. The Dread Lords are appearing as a minor race.

They have a star called "Dread Lords" and all the planets are "Dread Lords I, Dread Lords II" etc. I can talk to them, trade with them, ally with them, etc, like any other minor race. They even show up in the "Dread Lords on Parade" scenario, so the same species shows up twice as two separate civs. Except for their frigates, all their ships look just like the "major" Dread Lords. Their leader is Lord Dread. They have the same techs as everybody else, not the superpowerful techs of the "major" Dread Lords.

If that's not supposed to happen, then it's a bug. If it is supposed to happen, then their freighters are glitched, because they have no design, thus are completely invisible. Their frigates also look like one huge armor module as opposed to an actual ship.