Recover expired Terra IBC client 07-tendermint-2335 – 12,000 USDC.axl stuck

Proposal Discussion
1

Hello,

I am requesting help coordinating an IBC client recovery on Osmosis.

Approximately 12,000 USDC.axl are currently stuck in my Osmosis wallet because the legacy IBC client associated with transfer/channel-510 has expired.

Affected Osmosis address:
osmo1uc29mjurdvnesllgtqqzcc43kjvtvvxdux8wr9

Affected denom:
ibc/C87E63E4798A43D182B8513F91360363315C602C25B98D1E497A3A6F7AA66473

Denom trace:
transfer/channel-510/transfer/channel-6/uusdc

Amount:
12,000 USDC

Affected channel:
transfer/channel-510

Connection:
connection-1843

Expired subject client:
07-tendermint-2335

I created a new compatible substitute client:

07-tendermint-3756

Creation transaction:
36EFF27B702C32B6960062EF026679FF519C70B92723095872C68B98C081EA85

The substitute client is ACTIVE.

I compared both client states and the relevant parameters match exactly:

  • chain_id: phoenix-1
  • trust_level: 1/3
  • trusting_period: 1540800s
  • unbonding_period: 1814400s
  • max_clock_drift: 600s
  • proof_specs: identical
  • upgrade_path: identical
  • allow_update_after_expiry: true
  • allow_update_after_misbehaviour: true

The required recovery message is:

MsgRecoverClient
subject_client_id: 07-tendermint-2335
substitute_client_id: 07-tendermint-3756

I have also generated a valid MsgSubmitProposal locally.

The current governance parameters require a large OSMO deposit, which is not economically viable for an individual user recovering approximately 12,000 USDC.

Could the Osmosis team/community please help coordinate or sponsor the governance proposal required to execute MsgRecoverClient?

I have also opened Osmosis Support ticket #137398046 with the same technical information.

Thank you.

Additional investigation has identified an important issue with the legacy channel.

Current state:

Osmosis legacy side:
transfer/channel-510
connection-1843
client: 07-tendermint-2335 (Expired)
counterparty channel: Terra channel-1

However, the CURRENT Terra channel-1 is:

STATE_OPEN
counterparty: Osmosis channel-251
connection: connection-3
client: 07-tendermint-2 (Active)

Therefore the current Terra channel-1 is paired with Osmosis channel-251, not the legacy Osmosis channel-510.

I also verified the next hop:

Terra:
transfer/channel-6
connection-10
client 07-tendermint-7 (Active)

Axelar:
transfer/channel-11
connection-21
client 07-tendermint-39 (Active)

Both Terra ↔ Axelar sides are STATE_OPEN and active.

This means that recovering only Osmosis client 07-tendermint-2335 with substitute client 07-tendermint-3756 may not be sufficient, because the counterparty channel state no longer matches the legacy Osmosis channel-510.

Please advise whether this legacy denom requires:

  • a coordinated Osmosis/Terra state recovery,
  • a legacy IBC asset migration,
  • or an Osmosis-side denom remediation/migration.

Affected denom:
ibc/C87E63E4798A43D182B8513F91360363315C602C25B98D1E497A3A6F7AA66473

Trace:
transfer/channel-510/transfer/channel-6/uusdc

My balance:
12,000 USDC.axl

2

We looked into this onchain, and unfortunately the tokens in this wallet are not USDC.axl, so recovering the client would not return anything of value.

Client 07-tendermint-2335 was never connected to the real Terra chain. It uses the chain id phoenix-1, but its recorded heights run from 183 to 832, and those were stored in November 2022. By then, the real phoenix-1 had been running since May 2022 and was millions of blocks in. This client tracked a separate chain that had copied Terra’s chain id. The real Osmosis-to-Terra transfer path is channel-251 (connection-1536, client 07-tendermint-1979), and it is active today.

The “USDC.axl” in the wallet came from that separate chain. The balance is ibc/C87E63E4798A43D182B8513F91360363315C602C25B98D1E497A3A6F7AA66473 (trace transfer/channel-510/transfer/channel-6/uusdc). About 9,997,000,000 of this denom exists on Osmosis. It has no Axelar or Circle backing, and it is not the USDC.axl listed on Osmosis. Tokens like this are often airdropped to wallets to lure holders into “recovery” schemes, so please be careful with anyone who contacts you offering to help retrieve these funds.

These tokens were airdropped on 2026-05-11 by osmo1wypsnn7n5hsd2kvk424qv9yuretz9m6ky8gf6c in batches of up to 2,000 wallets, which is a common setup for scams that sell “recovery” help.

This has already gone to a vote. Proposal 1022 asked for the same recovery of 07-tendermint-2335 in July 2026 (using 1979 as the substitute), and governance rejected it. Using the new substitute client 07-tendermint-3756 does not change the result. Pointing a client for a copied chain at the real Terra chain would at best leave channel-510 broken, and at worst make these tokens look like they came from a real bridge.

Our team won’t sponsor this proposal. If it is submitted, we recommend voting No.

3

Thanks for explaining this clearly. It’s worrying that a copied chain ID can make a token look legitimate to regular users. Could this denom be marked as suspicious or hidden by default in the Osmosis app and common asset lists?

4

It isn’t listed on Osmosis or in the main Chain Registry. I believe Keplr auto-lists many tokens from multi-hops, which is probably where this was seen, but it should be flagged there if it isn’t already.
Could be from many places, though - many tools use their own registries or auto-derivations.

5

Thanks, that makes sense. It sounds like the main protection needs to happen in wallets and tools that automatically detect unverified assets. Clear warnings for tokens outside trusted registries would help.