About 36% of Osmosis Alloyed BTC lost the bitcoin that was supposed to sit behind it. On September 9 the Cosmos exchange paused minting and redemptions for its wrapped bitcoin token after a double-spend on the Nomic bridge produced false vouchers, and validators froze 22.65 BTC tied to the attacker. Trading in existing pools kept running. Everything else stopped.
What broke was the backing, not a drained wallet in the usual sense. Osmosis counted 110.57 Alloyed BTC in circulation and found that 39.84 of them, the nBTC minted through Nomic, had no real coin underneath. That works out to 36.03% of the basket. Roughly 70.73 coins of genuine backing were left standing.
| Alloyed BTC after the exploit | BTC | Share |
|---|---|---|
| In circulation | 110.57 | 100% |
| Valid backing left | 70.73 | about 64% |
| Fabricated nBTC | 39.84 | 36.03% |
| Frozen by validators | 22.65 | - |
| Still missing | 17.19 | - |
The bad mints trace to June, not this week
This is the part most coverage walked past. The fraudulent minting did not happen the day it hit the headlines. Osmosis traced the main activity to June 25 and a second burst to July 17. The public disclosure came on September 9. A third of the token's reserve sat unbacked for more than two months before anyone holding it was told.
That gap matters because Alloyed BTC is meant to be a receipt. One token, one bitcoin, redeemable. For most of the summer that promise was quietly false for 36 of every 100 coins, and the on-chain reserve pages did not show it.
Freezing 22.65 BTC still leaves a hole
The coins validators locked do not close the shortfall. Subtract the frozen 22.65 BTC from the 39.84 that were fabricated and about 17.19 BTC of backing is still gone. Osmosis governance now has to vote on whether to confiscate the frozen bitcoin and pull the rest from the community pool to bring the token back to a clean one-to-one. Reserve claims and on-chain reality drift apart more often than dashboards admit, the way one buyback listed at 99% of fees actually ran near 61%. Protocols have also raced against the clock to plug a reserve gap like this before, and it is rarely tidy.
Osmosis says the bug was upstream
Osmosis put the failure on Nomic. It said neither its own chain nor the Inter-Blockchain Communication protocol was compromised, and that the flaw lived in Nomic's custom forwarding logic, which let the same nBTC be spent twice. It is a familiar move. Another Cosmos team recently called its core modules untouched after an exploit and pointed at the edges. Whether that line reassures a holder whose wrapped bitcoin is now 36% air is a separate question from where the code sat.
The backdrop is a bruising year for exactly this kind of break, where stolen keys and bridge flaws have driven most of 2026's losses. Watch the governance vote next. It decides whether the missing 17.19 BTC gets filled from the community pool or left as a standing dent in what Alloyed BTC is worth.