Cosmos EVM exploit concerns widened after an attacker created and bridged roughly $50 million in NES tokens through Nesa Chain. However, collapsing liquidity limited the operation’s estimated net profit to approximately $60,000 during the sales.
This incident highlighted the vulnerabilities faced by other networks that use the same blockchain structure. The Cosmos EVM allows the use of Ethereum-compatible smart contracts on Cosmos SDK-based chains.
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How Did the Cosmos EVM Exploit Yield Only $60,000?
The Cosmos EVM exploit started when 0x9AE7 bought around $250,000 of NES and then transferred the tokens to Nesa Chain. Bubblemaps traced the wallet’s original funding to Monero.
Then the attacker exploited the vulnerability to multiply the balance of NES tokens by 200 before moving $50 million of the tokens to Ethereum. These tokens were then distributed between eight wallets.
The attacker swapped NES tokens for ETH on decentralized exchanges and then moved the tokens to centralized exchanges.
However, the Cosmos EVM exploit made the liquidity dry out while swapping, and the attacker was subjected to huge slippage.
It is estimated that the attack cost $255,000 and made $315,000 in gains, which implies that the hacker earned $60,000 despite having tokens worth nearly $50 million.
Cosmos Labs Urges Affected Chains to Pause and Upgrade
The event triggered a wider reaction since vulnerable Cosmos EVM software affects other networks apart from Nesa. Cosmos Labs advised other projects utilizing the exposed version to pause their chains and complete the required upgrades.
According to KiiChain, the hacker repeated this attack process 18 times and stole 148,326,583.15 KII before the validators took the network down. The TAC chain also stopped its operation because one of the accounts was stolen.
These incidents highlight how shared code enables a single security issue to infect several ecosystems. These attacks will lead to different losses, depending on the local token liquidity, bridge availability, exchange liquidity, and response by validators.
Why the Cosmos EVM Exploit Remains Unclear
This recent attack took place amid the heightened activity of cyberattacks against cryptocurrencies. In July, crypto exchanges incurred losses worth $247.4 million; bridges were popular targets. Another recent attack involving the unauthorized minting of SAND tokens in cross-chain bridges.
In March, a security advisory outlined a critical issue regarding state management. This vulnerability would enable a reusability of token balances while executing EVM transactions. However, this was fixed via the deployment of version 0.6.0 of the software.
The connection between the previous vulnerability and the current Cosmos EVM hack has not been verified yet. It is also unclear how many networks have been affected. It will only be known until a detailed technical report is issued.
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