On Sept. 9, 2026, Osmosis said it had halted inbound and outbound transactions involving Nomic and Alloyed BTC after an exploit on the Nomic network put about 36% of Alloyed BTC’s backing at risk. Osmosis and validators also carried out an emergency upgrade that made it possible to freeze 22.65 BTC at the attacker’s address.

According to an Osmosis statement, the vulnerability allowed the attacker to double-spend nBTC and send false vouchers to the Osmosis exchange. The attacker injected 39.84 nBTC into the system, accounting for about 36% of Alloyed BTC’s total reserves and leaving the token partially undercollateralized.

Osmosis said neither its decentralized exchange nor the IBC protocol was compromised. It said the vulnerability was in a custom transaction-forwarding mechanism on the Nomic side.

After identifying the issue, Osmosis froze inbound and outbound transactions for Nomic and Alloyed BTC on its platform. The team then worked with validators on the emergency upgrade that enabled the freeze of the 22.65 BTC.

Osmosis plans to submit a community governance proposal seeking approval to confiscate the frozen assets. The team will also ask governance to use accumulated bitcoin from the community pool to cover the remaining shortfall and fully restore Alloyed BTC’s backing.

Earlier, about 4,000 BTC worth $320 million was withdrawn from the Liquid Network because of a likely error in Elements. The alleged “ethical hackers” later returned 3,400 BTC to the Liquid Network.

Source: Incrypted