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Osmosis freezes 22.65 BTC tied to allBTC after Nomic bug

The freeze stems from a double-spend that left part of allBTC’s Bitcoin-variant backing in question, putting redemption at full parity on governance action.

Reported · Written up by our desk · Market Structure

Osmosis has frozen 22.65 BTC worth of assets related to allBTC after a flaw in Nomic’s custom forwarding logic allowed a double-spend, leaving the allBTC token partly unbacked by Bitcoin variants held on Osmosis. CryptoSlate reports that allBTC is issued against a basket of Bitcoin variants, including nBTC from the Nomic bridge.

At the reporting cutoff, Osmosis said its allBTC dashboard showed 110.57 allBTC in circulation and 39.84 nBTC in the basket. Osmosis added that the nBTC was created from false vouchers, raising questions about 36.03% of allBTC’s backing and leaving about 70.73 BTC-equivalent from other backing.

Osmosis said neither its chain nor the Inter-Blockchain Communication protocol was compromised, and that the issue was isolated to Nomic’s forwarding logic. It also said its nBTC was created from false vouchers, while on-chain incident tracking by SlowMist characterized the event as a Nomic bridge double-spend.

The restrictions freeze inflows and outflows for the affected functions and pause allBTC minting and redemption, blocking entry and exit while the backing gap remains unresolved. Osmosis plans to ask governance to confiscate the 22.65 BTC and use Bitcoin in its community pool to cover the remainder, and it noted governance would still need about 17.19 BTC even if the full frozen amount is recovered.

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