The Cosmos Hub network halted block production for approximately 24.5 hours before resuming operations. During the operational pause, validators seized 1,227,121 stolen ATOM from the hacker’s control and transferred them to a dedicated recovery wallet.
An exploit on the Neutron network on September 22 triggered the multimillion ATOM theft. Rather than breaching the underlying security layer, the attacker submitted a malicious governance proposal. Once passed, the vote granted the attacker’s address full control over Astroport smart contracts and several other protocols.
The stolen assets were moved across several different blockchain networks. The hacker also swapped a portion of the ATOM through THORChain liquidity pools. A batch of stolen funds amounting to 1.73 million ATOM flowed into Cosmos Hub, forcing validators to intervene and freeze the network right as the system reached block 33,086,740.
Intercepting Assets via Software Upgrade
On September 23, the Cosmos Hub network resumed operations. Validators implemented the Gaia v28.3.0 software upgrade to cut off the hacker’s access. New code within the update redirected the hacker’s remaining balance into a protective multi-signature wallet.
Nansen, Keplr, Enigma, Silknodes, Kiln, and Polkachu now share signing authority over the new wallet. These six community validators enforce a strict quorum: moving any funds requires approval from at least four out of the six keyholders.
The Fate of the Stolen ATOM
Cosmos Labs emphasized that the 1.23 million ATOM in the recovery wallet cannot be moved or returned unilaterally. Any asset transfer requires a passed Cosmos Hub governance proposal with majority approval. While this incident proves validators can technically intervene to recover assets, only the community governance process can decide the final destination of the funds.
Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
