Cosmos Labs says it wrongly cleared the bug behind a $5.7 million six-chain hack

Cosmos Labs said attackers stole funds across six blockchain networks between Aug. 20 and Aug. 25 using a flaw in Cosmos EVM, the shared software that lets Cosmos chains run Ethereum-style applications, according to a technical post-mortem published Friday.

Attackers exchanged the stolen tokens for about $2.87 million in other assets on decentralized exchanges and $2.85 million on centralized exchanges, per the report, which also states the attacker's centralized exchange accounts "have been frozen pending investigation by the relevant authorities."

Cosmos Labs notably disclosed that a researcher had identified the flaw and submitted a report through the Cosmos bug bounty program on April 25, according to the post-mortem. Cosmos Labs said its testers could not reproduce the attack against the configuration used by live Cosmos chains, including all known production Cosmos EVM networks, and therefore concluded that funds on those networks were not at risk.

"Based on that assessment, Cosmos Labs addressed the vulnerability through its silent, public patch process rather than the private patch distribution process used when a vulnerability is believed to threaten live user funds," the report states. 

The vulnerability

The attacker exploited a bug known as integer underflow to trick the Cosmos EVM networks into crediting the attacking wallets with effectively infinite tokens. By first setting up an account holding locked tokens and then delegating more of them to a validator than the account could spend, the account's balance subtracted past zero, which caused its value to underflow and wrap around to the maximum value of 2^256-1 base units, a massive, 78-digit number. 

The second step ran the same arithmetic in reverse. The attacker sent the inflated balance, which was seen as valid by the blockchain, to a target account, pushing that account past the same 78-digit ceiling, this time overflowing the value and wrapping it back down, which left the attacker holding the target's tokens and the target with nothing.

No tokens were created in the process, and total supply was effectively unchanged. In its own post-mortem, also published Friday, MANTRA said the exploit moved its supply by a single base unit, or the smallest divisible unit of the token.

Cosmos Labs said the targets were arbitrary accounts holding large balances, such as burn addresses and multi-signature wallets created when a chain launched. Cosmos Labs' advisory is rated critical and covers Cosmos EVM releases before v0.6.2 and v0.7.2. Cosmos EVM is the ecosystem's native EVM framework, built from the open-source Evmos codebase.

The timeline

Cosmos Labs, under the impression that the vulnerability did not affect live chains, merged a fix in May under its silent patch process, which ships bug fixes but does not tell chain operators what it addresses. The firm said it has patched 37 vulnerabilities that way over the past 13 months.

However, reports from independent researchers in early August established that the bug affected all Cosmos EVM chains, according to the post-mortem. Cosmos Labs said it then obscured the fix to prevent reverse engineering and released the patch at 7:01 p.m. ET on Aug. 19, though its release notes referred to "important" security fixes without describing the specifics.

The first attack began at 3:06 p.m. ET on Aug. 20, about 20 hours later.

"Twenty hours was not a realistic window in which to assess, build, test and coordinate a state-breaking upgrade across 38 independent validators, particularly without a vulnerability-specific advisory," MANTRA wrote in its post-mortem. MANTRA also said it has formally raised the delay with the Cosmos maintainers and is seeking "clearer disclosure practices and defined backport expectations for security-relevant fixes."

Cosmos Labs also cited another factor that led to the attack. At 3:16 a.m. ET on Aug. 20, about 12 hours before the first theft, a developer at Push Chain filed a public code change describing the vulnerability and its exploitation path, crediting the finding to an audit by security firm Hacken and listing the affected versions.

The developer's report said no released version contained the fix, but its version table omitted v0.6.2 and v0.7.2, which had been published about eight hours earlier. Cosmos Labs called the public disclosure of an exact exploit path by a downstream developer "highly unusual" and said it can increase the risk of an exploit.

"The security finding was filed 11 hours and 45 minutes before the attacker’s first probe," MANTRA's post-mortem states. "The attacker’s wallet was funded almost four hours before the finding was filed. We state the timing as fact and draw no conclusion from it." A 472.70 MANTRA (formerly OM) withdrawal from a customer account at a centralized exchange paid the gas fees for the entire attack, the chain said.

The losses

As a result of the exploit, MANTRA lost 720.9 million MANTRA tokens then worth about $3.6 million that was drained from two addresses: the network's burn address and a dormant multisig wallet left over from an earlier incentive campaign. 

No automated alert fired on the first attack transaction because "the burn address is treated as immovable, so our monitoring systems did not cover transfers from it," MANTRA said. The theft went undetected for nearly four hours, per the report, time which the attacker used to drain the dormant multisig wallet.

The chain halted at 7:13 p.m. ET on Aug. 20, resuming a little over 30 hours later on the patched software, without a rollback. The halt froze about 38 million MANTRA in the attacker's wallet. The attacker had already sent the other 94.7% of tokens to a single exchange deposit address across 15 transfers.

TAC, which brings DeFi applications to TON and Telegram users, lost nearly 3 billion TAC from its staking pool on Aug. 22, Cosmos Labs said. About 1.2 billion of those tokens were sold on BNB Chain for around $950,000.

KiiChain, which deals in foreign exchange infrastructure, lost about 148 million KII the same evening. 64.6 million KII tokens were sold for about $1.6 million, according to the report. Cosmos Labs said roughly 54% of the KII taken remains recoverable onchain should the network be restored.

Three further chains were attacked using the same method, the firm said, without naming them.

One may be Nesa, an AI-focused blockchain. Exchange Bitvavo suspended NES deposits and withdrawals on Aug. 24, citing a "critical consensus vulnerability" that had been exploited to make vulnerable nodes accept invalid blocks.

Blockchain analytics firm Bubblemaps identified Nesa as one of the affected chains in an analysis published Aug. 26. The attacker bought about $250,000 of NES, bridged it to Nesa, used the bug to inflate the balance 200-fold and moved $50 million of NES back to Ethereum, according to the firm.

However, Bubblemaps said, most of the attacker's swaps hit extreme slippage as liquidity was pulled from the trading pools, leaving only $60,000 in profit for the attacker. The wallet was originally funded from Monero, the firm said.

Bubblemaps also said the way the Nesa attacker was funded and operated was different enough from the earlier attacks that a separate party may have been responsible. Cosmos Labs did not name Nesa in its report. Nesa has not yet published its own post-mortem.

The two remaining chains have not been publicly identified. Cosmos Labs and Nesa did not immediately respond to requests for comment from The Block.

No tokens have been recovered as of Aug. 28, MANTRA said. MANTRA's circulating supply rose by about 720.9 million tokens, though, because the drained balances had been excluded from supply reporting as unspendable (such as the tokens in the burn address) but are now tradable. 

KiiChain's account

KiiChain published its own technical post-mortem on Aug. 23, five days before Cosmos Labs released its report, and complained that Cosmos did not tell affected chains to halt.

"Cosmos Labs gave no advance notice to downstream chains, did not flag the release as security critical, and did not tell affected chains that a public release had happened until Friday 21 August, two days later," KiiChain's report states. Cosmos Labs only recommended halting on Aug. 22, after MANTRA, TAC and KiiChain had all been hit.

"A patch takes days to review, build, test and roll out across a validator set. A halt takes minutes," KiiChain wrote. "The only measure that would have contained the risk immediately was a clear instruction to stop producing blocks, and that instruction came after the damage was done."

KiiChain also said the exploit required three upstream defects rather than just two, and that only the underflow has been patched publicly. MANTRA's post-mortem takes the opposite view, describing the underflow fix as "the control that closes this attack path" and saying it verified that against a working reproduction of the exploit. Cosmos Labs' report describes two chained vulnerabilities but does not address KiiChain's claim that a third upstream defect remains unpatched. KiiChain did not immediately respond to a request for comment from The Block. 

Cosmos Labs said it coordinated with 40 chains during the response and worked with 13 others to patch the vulnerability or halt their chains before they were attacked in turn. Notably, the firm said it does not hold a complete registry of the more than 115 public blockchains in the broader Cosmos ecosystem, and that it discovered 11 previously unregistered Cosmos EVM deployments during the response.

MANTRA traded near $0.0043 on Saturday, according to CoinGecko data, down around 70% year-to-date. MANTRA, which cut staff during a restructuring after its token collapsed in 2025, is being acquired by existing backer Inveniam Capital Partners in a deal expected to close this quarter.