ixo Blockchain x/bonds DID-resolved payer drain + x/entity ICA authorization bypass

Impact

Type: Improper authorization leading to unauthorized movement of user funds.

The x/bonds module moved funds from an address that was resolved from a DID verification method, without verifying that the resolved address belonged to the transaction signer. Affected handlers included MsgMakeOutcomePayment, MsgBuy, MsgSell, MsgSwap, and MsgWithdrawShare, as well as the batch order processor.

Because any account may list an arbitrary blockchainAccountID as a verification method on a DID it controls (without the consent of that address's owner), an attacker could register victims' addresses as verification methods on their own DID and then move the victims' balances into a bond the attacker controlled — later withdrawing and bridging the proceeds off-chain.

This was exploited on ixo mainnet (ixo-5) on 2026-06-20. The attack required no victim keys, signatures, or system compromise — any account holding a balance in a token a bond could use was at risk.

Patches

Fixed in v8.0.0, delivered via the on-chain v8 software-upgrade. The x/bonds module is disabled: every bonds message is rejected on all routes (top-level, authz, CosmWasm, and ICA), and the bonds batch EndBlocker is a no-op so no further reserve movements can occur.

All node operators and validators must upgrade to v8.0.0. The flaw is in chain state-machine logic and can only be remediated by running the patched binary.

Workarounds

There is no application-level workaround. The vulnerability is in consensus logic; remediation requires the network to run the patched (v8.0.0) binary. The bonds module remains disabled in v8.0.0 and will only be re-enabled in a future release once the signer-authorization model has been corrected.