Cosmos-based decentralized exchange (DEX) Osmosis has confirmed a security incident on the connected Nomic network that left a large share of Alloyed BTC (allBTC), the exchange’s bundled Bitcoin token, without full reserve backing.
The exchange said an attacker was able to double-spend Nomic’s Bitcoin-backed asset, nBTC, and send false vouchers onto Osmosis. Osmosis said the bug sat in a custom forwarding mechanism on Nomic, and that Osmosis contracts and the Inter-Blockchain Communication (IBC) protocol were not compromised.
Minting, redemptions, and Nomic-related deposits have been paused, and validators have completed an emergency upgrade that Osmosis said froze 22.65 BTC in the attacker’s address.
What Osmosis has confirmed
According to Osmosis’s official X statement at 09:48 UTC on September 9, 2026, 39.84 nBTC now sits inside the Alloyed BTC contract and represents approximately 36% of the alloy’s backing. Moderation subDAOs froze inflows and outflows for both Nomic and Alloyed BTC before validators completed the emergency upgrade that quarantined the 22.65 BTC tied to the attacker’s address.
The exchange said it will submit a seizure proposal to Osmosis governance and ask OSMO holders to authorize the use of Bitcoin already held in the community pool to close the remaining backing gap and restore a 1:1 peg for Alloyed BTC.
Asian desks including Foresight News, PANews, Odaily, and ChainCatcher earlier quoted Osmosis as saying mint and redeem functions for Alloyed BTC were already paused, that related deposits and withdrawals were halted, and that nBTC then acc ounted for about 30% of Bitcoin backing on Osmosis. That earlier X URL was no longer live on @osmosis when checked on September 9.
Bitcoin trading in liquidity pools remains live, and users have been warned to treat exposure as elevated. A full incident report and post-mortem had not been published at the time of writing.
What Alloyed BTC and nBTC are
Alloyed BTC, ticker allBTC, is Osmosis’s canonical Bitcoin unit. A CosmWasm “transmuter” contract holds several bridged Bitcoin variants and mints one fungible token against them, avoiding liquidity fragmentation across Wrapped Bitcoin (WBTC), Axelar-wrapped Bitcoin (WBTC.axl), Coinbase-wrapped Bitcoin via Axelar (cbBTC), Internet Computer’s Chain-key Bitcoin (ckBTC), and Nomic’s nBTC.
Users deposit a supported variant to receive allBTC or redeem allBTC back into a backing asset that still has room in the basket, as documented in Osmosis’s Alloyed Assets documentation and shown live on the public alloy dashboard.
Governance recognized Alloyed BTC as the chain’s standard Bitcoin representation in Proposal 813 and later raised static caps for nBTC to accommodate rising demand for direct Bitcoin deposits through Nomic.
Nomic is a proof-of-stake Cosmos chain that operates a decentralized, non-custodial Bitcoin bridge and issues nBTC, which travels to Osmosis over IBC. In 2024, Proposal 795 established a revenue-share agreement under which Osmosis waived certain bridging fees for routes involving the exchange in return for 10% of taker fees generated by nBTC trading.
Later that year, Nomic completed a security review by cybersecurity firm Trail of Bits. The audit described the chain as decentralized and flagged a single medium-severity account-format issue that Nomic said it had already fixed. The current incident, which Osmosis has attributed to a bug in a custom forwarding mechanism on Nomic, sits outside that earlier finding.
What Osmosis has and has not said
Osmosis has not published a line-by-line post-mortem, named the attacker, or said whether the Nomic Bitcoin reserve on Layer 1 (L1) was drained. Nomic’s own official account had not posted a matching statement in searches through the morning of September 9.
Independent on-chain researcher Rarma published a detailed transaction trace on September 8, arguing that the gap in Alloyed BTC backing corresponds to the nBTC Nomic issued, that Nomic has not produced Bitcoin checkpoints since September 6, and that the Nomic chain appeared to halt on September 7.
The write-up maps an alleged conversion route for part of the minted nBTC through Osmosis liquidity pool 1868, Axelar, Noble, and Ethereum. These claims are researcher analysis rather than an Osmosis or Nomic audit. Osmosis’s later official numbers, 39.84 nBTC affected and 22.65 BTC frozen, are consistent with the scale Rarma described, without endorsing every transaction referenced in the thread.
Former Osmosis co-founder Sunny Aggarwal replied on X that the Osmosis Foundation’s conversion of allBTC into wrapped Bitcoin around the pause was tied to a scheduled BitGlobal test of native WBTC burns and not an opportunistic exit. He added that further team communications would follow and that the Osmosis community pool holds enough Bitcoin to cover the shortfall if governance approves the seizure route.
Past Osmosis incident response
This is not the first time Osmosis has isolated a connected-asset failure. On August 11, 2026, the exchange paused minting and redemption for its alloyed XRP after an exploit on the tx XRPL bridge, keeping pool trading live while XRP.coreum continued to provide most of that alloy’s backing. The current pattern mirrors that playbook: freeze the affected alloy, keep spot pools live with a risk warning, then wait on the external bridge team and governance.
The closest institutional precedent is the June 2022 incident, when a liquidity-pool share-calculation bug allowed users to withdraw more than they had deposited. Validators halted the chain within minutes, and losses were estimated near $5 million, with the Osmosis Foundation pledging to cover the shortfall from strategic reserves. The Crypto Times covered that halt at the time.
The 2026 response is narrower. The Osmosis chain itself was not halted. Only Nomic and Alloyed BTC flows were frozen, and the proposed backstop combines a governance-driven seizure with community-pool Bitcoin rather than a full chain restart.
Alloyed Assets were designed with static and change-rate limits so that a single weak bridge could not empty the entire basket. Those limits did not stop unbacked nBTC from entering the alloy once Nomic vouchers were accepted as valid, but they preserved room for the other Bitcoin variants and are why Osmosis has described a partial rather than total backing failure.
What happens next
Three items are outstanding.
First, an Osmosis governance vote on seizing the frozen 22.65 BTC and topping up Alloyed BTC from the community pool. No proposal identification number was live on public dashboards at the time of the official post.
Second, a promised post-mortem from Osmosis, and any statement from Nomic on chain liveness, Bitcoin checkpointing, emergency disbursal, and the remaining nBTC outstanding relative to Bitcoin held in reserve on Layer 1.
Third, the status of pool trading. Osmosis has left Bitcoin tradable in pools while mint and redeem functions are off. That configuration can produce a discount or premium if traders begin pricing the backing gap before governance acts.
Holders should treat unofficial recovery pages and airdrop websites as hostile. Osmosis-branded claim scams have already circulated in 2026, and official updates continue to appear only on the @osmosis account on X and in Osmosis documentation, not on third-party refund domains.
This article is a news report and not investment advice. Figures for backing, frozen Bitcoin, and Alloyed BTC composition are those stated by Osmosis or by public dashboards as of September 9, 2026, and may change once the post-mortem lands.
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