Nomic Exploit Lets Attacker Double-Spend nBTC, Osmosis Freezes 22.65 BTC

Highlights”

• Osmosis revealed that a Nomic exploit allowed false nBTC vouchers to enter Alloyed BTC and affect its backing.
• Validators froze 22.65 BTC from the attacker, while Osmosis stopped Nomic and Alloyed BTC transfers.
• Osmosis plans to ask governance to seize frozen funds and cover the remaining Alloyed BTC shortfall.

Osmosis, a decentralized crypto exchange and blockchain in the Cosmos ecosystem, has shared new details about an exploit on the Nomic chain that affected nBTC and Alloyed BTC. The team said on September 9 that the attacker double-spent nBTC and sent false vouchers to Osmosis. According to Osmosis, the problem came from a custom forwarding system used by Nomic. Osmosis itself was not hacked, and the IBC protocol was also not affected.

The exploit resulted in 39.84 nBTC entering Alloyed BTC. Osmosis said this amount now makes up about 36% of Alloyed BTC’s backing. After finding the problem, Osmosis moderation subDAOs stopped inflows and outflows for both Nomic and Alloyed BTC. Validators also carried out an emergency upgrade. That move froze 22.65 BTC held in the attacker’s address.

Osmosis said:

“The exploit allowed the attacker to double-spend nBTC, allowing them to send false vouchers to Osmosis. Osmosis and IBC were not compromised, as the bug was in a custom forwarding mechanism on Nomic.”

Osmosis Freezes Funds After Nomic Exploit

nBTC is a Bitcoin-backed asset created by Nomic. It allows Bitcoin to move into networks connected through IBC, including Osmosis. The problem started when the attacker found a weakness in Nomic’s forwarding mechanism. That bug allowed false nBTC vouchers to be sent to Osmosis. Some of those tokens then entered Alloyed BTC, also known as allBTC. Alloyed BTC combines different forms of bridged Bitcoin into one asset. Users can hold or trade one Bitcoin asset instead of dealing with several versions. 

Osmosis moved quickly after noticing the issue. It paused deposits and withdrawals linked to Nomic and Alloyed BTC to prevent the problem from worsening. The team had already paused Alloyed BTC minting and redemption while it investigated the incident.

Recently, we became aware of an exploit on the Nomic chain. The exploit allowed the attacker to double-spend nBTC, allowing them to send false vouchers to Osmosis. Osmosis and IBC were not compromised, as the bug was in a custom forwarding mechanism on Nomic.

39.84 nBTC of the…

— Osmosis 🧪 (@osmosis) September 9, 2026

Governance Will Decide How to Cover the Loss

Osmosis now plans to take the recovery process to governance. The team will ask the community to approve the seizure of the 22.65 BTC already frozen in the attacker’s address. It also wants to use Bitcoin from the Osmosis community pool to cover the remaining shortage. The total affected amount is 39.84 BTC. After using the frozen 22.65 BTC, it would still need to cover about 17.19 BTC.

If the proposal passes, Osmosis expects Alloyed BTC to return to full backing. However, the recovery is not complete yet. Governance must first approve the plan.

nBTC Had Become a Large Part of Alloyed BTC

nBTC had already become an important part of Alloyed BTC before the exploit. When Alloyed BTC first launched, nBTC had a 5% limit. The limit later increased to 10%, then 20%, and eventually 35%. In July, an Osmosis governance discussion proposed raising the limit again to 60%. At the time, nBTC already made up about 33% of the Alloyed BTC pool.

Alloyed BTC was designed with emergency controls for situations like this. Moderators can temporarily stop activity when one of the Bitcoin assets inside the pool faces a security problem. Osmosis said it will share more information about the incident and the recovery plan. For now, the team says the bug was on the Nomic side and did not compromise Osmosis or IBC.