Osmosis has paused deposits and withdrawals after an exploit on the Nomic chain allowed an attacker to double-spend nBTC, the Bitcoin-backed token tied to Nomic. The exchange said 22.65 BTC has been frozen in the attacker's address, while the official allBTC dashboard showed 110.57 allBTC in circulation and 39.84 nBTC in the basket at the reporting cutoff.
Osmosis stated the nBTC was created from false vouchers, putting 36.03% of allBTC's backing in question and leaving about 70.73 BTC-equivalent of other backing. Neither the Osmosis chain nor the Inter-Blockchain Communication protocol was compromised; the bug was in Nomic's custom forwarding logic. SlowMist's incident database also described the event as a Nomic bridge double-spend.
The public disclosure came more than two months after the apparent exploit activity. On-chain researcher Rarma traced the principal minting to June 25 and said 22.65060846 allBTC created during July 17 activity remained unmoved when the trace was published. Nomic and allBTC inflows and outflows have been frozen, while allBTC minting and redemption are paused.
Osmosis plans to ask governance to confiscate the frozen 22.65 BTC and use Bitcoin accumulated in the community pool to cover the remainder. If governance recovers the full frozen amount, it would still need about 17.19 BTC to replace the 39.84 BTC impairment. No matching seizure or recapitalization measure appeared among the latest 20 on-chain proposals as of Sept. 9. Until enough valid backing is restored, allBTC holders remain collectively exposed because claims on the basket exceed its valid BTC-equivalent assets.
The incident has already slowed activity on Osmosis, with trading volume stalling. Wider crypto markets have remained mixed, but the episode tests confidence in Bitcoin-backed assets on Cosmos. The next steps include the Osmosis governance vote, any Nomic root-cause update, and whether affected balances can be made whole.
