DotSwap’s legacy V1 platform was recently exploited through a server-side signing pathway. About 8.5 BTC was transferred out over roughly four hours, with the announcement estimating the loss at around $685,000. The affected parties were V1 liquidity pools managed through custodial multisig and related accounts.
In other words, the issue did not affect the currently promoted On Nexus product line, but rather the discontinued legacy V1 version. Although the business had completed its transition, the server-side signing mechanism left over from V1 had not been fully decommissioned, creating an entry point for the attack. The losses ultimately fell on LPs who had deposited BTC into V1 pools.
The contrast is striking: many users assumed that “shutting down the old platform means funds have been safely withdrawn.” But as long as assets remain in old multisig pools and the server-side signing pathway is still active, the risk remains. When a Bitcoin-native asset protocol opts for custodial multisig with server-side signing, it needs to truly bring that mechanism to an end during retirement.
What’s worth watching next is how the team handles the remaining V1 assets and its relationship with LPs, and how it restructures the signing and custody processes under the On Nexus roadmap. Otherwise, “residual risks from legacy systems” could become a recurring gray rhino for protocols of this kind.
In other words, the issue did not affect the currently promoted On Nexus product line, but rather the discontinued legacy V1 version. Although the business had completed its transition, the server-side signing mechanism left over from V1 had not been fully decommissioned, creating an entry point for the attack. The losses ultimately fell on LPs who had deposited BTC into V1 pools.
The contrast is striking: many users assumed that “shutting down the old platform means funds have been safely withdrawn.” But as long as assets remain in old multisig pools and the server-side signing pathway is still active, the risk remains. When a Bitcoin-native asset protocol opts for custodial multisig with server-side signing, it needs to truly bring that mechanism to an end during retirement.
What’s worth watching next is how the team handles the remaining V1 assets and its relationship with LPs, and how it restructures the signing and custody processes under the On Nexus roadmap. Otherwise, “residual risks from legacy systems” could become a recurring gray rhino for protocols of this kind.
