Osmosis has opened governance forum discussions on a proposal to restore full reserve backing for Alloyed BTC after Nomic minted 40.65 nBTC on Osmosis without Bitcoin backing. The shortfall remained undisclosed for 74 days before Nomic paused operations on September 7, creating a total deficit of 39.84 BTC. About 22.65 BTC was frozen in attacker addresses through emergency on-chain upgrade v31.1.0, while roughly 18 BTC was laundered through Tornado Cash and cannot be directly recovered. The proposal would confiscate the frozen assets and use BTC reserves from the Osmosis community pool to cover the remaining shortfall of about 17.19 BTC. It remains subject to community discussion and a governance vote, and no assets have yet been confiscated or reserves replenished.