Osmosis freezes Alloyed BTC after Nomic exploit—36% at risk

Osmosis halted Alloyed BTC after a Nomic exploit enabled double-spending, impacting 36% of its backing. 22.65 BTC was frozen at the attacker’s address. Recovery plans and community votes are pending.

Osmosis has suspended all operations involving its Alloyed BTC asset following a security breach on the Nomic chain. The incident allowed an attacker to double-spend nBTC and introduce unbacked vouchers, exploiting a vulnerability in Nomic’s custom forwarding mechanism. As a result, 39.84 nBTC—about 36% of Alloyed BTC’s collateral—was affected, leaving the asset partially undercollateralized. Importantly, neither Osmosis nor the Inter-Blockchain Communication protocol were compromised. In response, Osmosis froze all inflows and outflows for both Nomic and Alloyed BTC. An emergency upgrade enabled the freezing of 22.65 BTC at the attacker’s address. The Osmosis team plans to propose community votes to confiscate the frozen assets and use community pool bitcoin to restore full collateralization. While existing BTC pools remain tradable, new Alloyed BTC cannot be minted or redeemed until further notice. This incident underscores the risks of cross-chain protocols and the need for strong security measures.