Syscoin has paused its bridge after an attacker exploited a validation flaw to mint approximately 5 billion unauthorized SYS tokens on the network's UTXO chain. According to AMBCrypto, the incident centered on the bridge relay path, which checks transactions moving between two chains. The attacker exploited a validation issue that resulted in an unauthorized SYS output being created on the UTXO side, with the system wrongly accepting a fraudulent transaction proof and treating it as valid. As per Syscoin's preliminary postmortem, the bridge remains paused while the team investigates the incident, completes a fix, and decides how to address the unauthorized SYS output. The team has confirmed that no private keys were compromised during the incident, with the exploit stemming specifically from a validation failure inside the bridge's proof-verification process.
The fraudulent transaction minted an unauthorized output of about 5 billion SYS through the UTXO bridge path, with those funds initially reaching a single address. As reported by AMBCrypto, attackers later spent and split the funds into two tainted balances of roughly 4 billion and 1 billion SYS across separate wallets. According to Syscoin's latest update, the funds were first sent to one address before being spent and split into other outputs. The team has published the initial UTXO transaction, the later spend, and the split transaction, and is actively tracing the funds across the UTXO trail. Syscoin described the findings as preliminary and urged users not to interact with the bridge while it remains paused.
The project is actively working with exchanges and ecosystem partners to prevent the tainted SYS from entering open markets. As reported by Syscoin, the team contacted exchanges and relevant partners after the incident, asking them to blacklist, freeze, or closely monitor SYS deposits tied to the tainted outputs. The project also asked partners to watch descendant spends from the affected UTXO trail to reduce the chance that the unauthorized SYS reaches open markets. SYS traded near $0.00165 after the update, with a market cap of about $9.7 million, according to CoinGecko data. The token was down sharply from its all-time high of $1.30, showing weak market confidence around the project. The slump comes amid a broader market recovery that has lifted total market capitalization by over 2%.
The team has identified the affected validation path and has a fix in place, though review and implementation are still ongoing. According to Syscoin, the incident is being treated as a top priority, with the project stating that its priority is to complete implementation and review of the fix while determining the correct process to rectify the unauthorized SYS output and neutralize its impact on the network. The team will provide further updates once the remediation path has been finalized. The incident comes as cross-chain bridge security remains under close watch across crypto, with bridge attacks remaining active in 2026. Related market reports have tracked rising bridge risks across the wider crypto sector, with several cross-chain systems hit in recent months.
