Nomic Bug Steals 22.65 BTC, Blows Hole in Alloyed BTC Backing
A software flaw in Nomic's custom IBC forwarding path allowed an attacker to mint unbacked nBTC, which were then stashed inside Osmosis's Alloyed BTC basket. This occurred on June 25 and went unnoticed for a staggering 74 days, until Osmosis discovered the issue this week.
The bug created 39.84 unbacked nBTC, blowing a 36% hole in Alloyed BTC's backing. Osmosis quickly shut down deposits and withdrawals involving Nomic and Alloyed BTC to prevent further damage. The team then worked with validators on an emergency update that locked 22.65 BTC sitting in the attacker's wallet.
Osmosis now wants governance to seize these assets and use accrued BTC from the community pool to cover the remaining balance and restore full backing to Alloyed BTC. An independent researcher, Rarma, found that Nomic's system accidentally created the same Bitcoin deposit twice, allowing the attacker to mint unbacked nBTC at a cost of just one satoshi.