Osmosis froze 22.65 BTC on its blockchain after a vulnerability in Nomic’s forwarding system enabled the creation of false vouchers, leaving the allBTC stablecoin partially unbacked.
The incident stemmed from a flaw in Nomic’s bridge logic that allowed invalid nBTC to be minted without corresponding Bitcoin backing. This compromised 36.03% of allBTC’s reserve basket, according to on-chain analysis by researcher Rarma. The false-voucher minting occurred on July 17, with principal activity traced back to June 25.
AllBTC is issued against a basket of Bitcoin variants held on Osmosis, including nBTC from the Nomic bridge. At the time of reporting, 110.57 allBTC was in circulation, backed by 39.84 nBTC and 70.73 BTC-equivalent in other assets. The vulnerability created 22.65060846 allBTC during the July 17 activity, all of which lacked valid backing.
SlowMist’s incident database classified the event as a Nomic bridge double-spend. Neither the Osmosis chain nor the Inter-Blockchain Communication protocol was compromised, according to the analysis. The bug was isolated to Nomic’s forwarding logic.
Osmosis governance administers the allBTC contract, with a 3-of-6 moderator subDAO able to pause the pool or mark assets as corrupted. Both Nomic and allBTC inflows and outflows have been frozen, and allBTC minting and redemption paused to prevent further exposure.
Osmosis plans to ask governance to confiscate the 22.65 BTC and use Bitcoin from the community pool to cover the remainder. If governance recovers the frozen amount, 17.19 BTC-equivalent would be needed to replace the impairment and restore full backing. Nomic’s Bitcoin custody documentation requires reserve disbursals to have signatures representing more than 90% of the signatory set’s voting power, a threshold that may affect recovery timelines.
Until valid backing is restored, allBTC holders remain collectively exposed because claims on the basket exceed valid BTC-equivalent assets. As of September 9, no matching seizure or recapitalization measure had been executed on-chain, according to proposal review.
