A vulnerability in Secret Network’s Axelar bridge was exploited on June 10, leading to the loss of about $4.67 million in digital assets through an infinite-mint attack that went undetected for a week, according to blockchain research firm Common Prefix. The exploit enabled the creation of unbacked tokens that were later swapped for real assets, with roughly $672,000 still traceable in the attacker’s Axelar wallet.
how the exploit happened
The breach was linked to a modified CW20-ICS20 contract used to bridge tokens between Secret Network and Axelar. The contract failed to verify the source channel of transfers, allowing forged deposits to pass as legitimate and enabling the minting of wrapped tokens without underlying collateral.
The attacker created a single-validator Cosmos chain, opened a new IBC channel, and sent counterfeit transaction packets resembling genuine token denominations. These were accepted as valid, allowing the attacker to redeem them for real assets held in Axelar escrow.
Seven token types were affected, including saUSDT, saUSDC, saDAI, saWETH, saWBTC, saWBNB, and sawstETH. The vulnerability had existed since the contract’s deployment in 2023 and remained in place after a March 5 code migration.
missing safeguards and delayed detection
Secret Network said the issue emerged after shifting from an escrow model to a mint-based design during Axelar integration, a change that removed key validation checks. No external audit was conducted before the update went live.
Because balances on Secret Network are encrypted, the loss was not immediately visible on-chain. The issue only surfaced on June 17 when a routine Axelar transfer failed. Investigators later traced the exploit to seven withdrawals made on the day of the attack.
The network confirmed that no automated monitoring or safeguards flagged the suspicious activity. After discovery, Axelar disabled connections to Secret Network, and cross-chain router Squid removed support for the network.
fund movements and response
Tracking data shows the stolen assets moved through Axelar and Osmosis, then bridged to Ethereum, where most were exchanged for ether via CoW Protocol. The funds were split across about 30 wallets and later appeared at known exchange deposit addresses.
Secret Network identified around $770,000 in recoverable funds and asked Axelar to freeze them, but the request was declined. Axelar said it is working with exchanges and authorities to trace the assets, though no timeline for restoring the bridge has been provided.
Axelar emphasized that its core protocol and the IBC framework were not compromised, stating the vulnerability stemmed from independently developed contract code.
market reaction and broader implications
Following disclosure, both tokens showed modest gains, with Axelar’s AXL rising 1.3% and Secret’s SCRT up 5.6% within 24 hours. The muted reaction reflects a growing pattern in 2026, where repeated bridge exploits have had limited immediate price impact.
The incident highlights a persistent weakness in cross-chain infrastructure, where custom integration contracts—rather than base protocols—are often the point of failure. In this case, a missing validation check and lack of external auditing left the system exposed for more than a year.
Bridge-related attacks continue to dominate the threat landscape. By mid-2026, such exploits have accounted for hundreds of millions in losses across the sector, reinforcing concerns around the security of wrapped assets versus native tokens.
For traders, the event underscores the risks tied to interoperability layers and the importance of scrutinizing the security practices of bridges used to move assets across networks.
Concerned about bridge exploits and missing safeguards? Learn how crypto safety standards help protect traders from similar risks.
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