[BUG] Critical Fallback Routing Failure: 50,551 USDC Trapped in Relay Adapt Contract via Safe Unshield Loop

[tom332]

Summary
When attempting to exit an integrated DeFi Yield Vault (Beefy/Morpho) that had accumulated contaminated funds, the PPOI (Private Proofs of Innocence) defense mechanism triggered a block. Executing the UI's recommended "Safely unshield to origin" feature caused the protocol to identify RAILGUN's own Relay/Broadcaster Contract (0xFA7093CDD...) as the "origin address." Consequently, 50,551 USDC was unshielded directly back into the Relay Adapt contract, leaving the funds locked on-chain with a Missing ❌ PPOI status and zero UI trace in the wallet.

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Environment

• App Version: Railway Windows Desktop Wallet (Latest)
• Chain: Ethereum Mainnet
• Integrated Protocol: Beefy / Morpho Yield Vaults (USDC Clearstar 3Jane V2, USDC Steakhouse Reservoir V2)
• Affected Contract: RAILGUN: Relay / Relay Adapt (0xFA7093CDD9EE6932B4eb2c9e1cde7CE00B1FA4b9)

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Sequence of Events & Cross-Wallet Proof

1. Initial Clean Deposit:

• Initial shield on Aug-15-2026 10:48:47 AM UTC possessed a 100% valid PPOI status (Valid ✅).

2. DeFi Vault Contamination:

• Deposited funds into Railway’s natively integrated Beefy/Morpho yield vaults.
• Due to external 3rd-party liquidity entering these public yield vaults, the resulting yield shares became contaminated upstream.

3. Cross-Wallet Deadlock (Proving Platform-Wide Issue):

• Wallet A (Test): Deposited ~50 USDC into Clearstar 3Jane Vault. Redeem triggered a PPOI block.
• Wallet B (Main): Deposited 50,551 USDC into Steakhouse Reservoir Vault. Redeem triggered an identical PPOI block on an entirely separate seed phrase.

4. Emergency Routing Logic Failure:

• Navigated to Activity -> View pending balance -> Restricted and clicked "Safely unshield to origin".
• The SDK erroneously set the destination origin as the Railgun Relay Contract itself (0xFA70...4b9).
• The transaction succeeded on-chain, but the funds were transferred into RAILGUN's Relay Contract rather than the user's public EOA.

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Root Cause Analysis

• PPOI Mechanism Overreaction: Valid user deposits were tainted after interaction with native DeFi pools due to aggregated vault liquidity.
• Fallback Route Invalidation: The "Unshield to origin" feature incorrectly parsed the Relay/Broadcaster contract as the original fund source (or fallback target) instead of the user's actual underlying EOA/0zk balance.
• State Loss: The fallback unshield transaction lacks a standard zero-knowledge proof generation step, resulting in a Missing ❌ status in the PPOI Lookup Tool and leaving the wallet UI unable to recognize or recover the balance.

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On-Chain Evidence & Transaction Log

Wallet A ($50 Test Wallet)

• Shield Tx: 0x8e0a0d92be13bb62e11aa7c149b4ac9498143b29c83b1a8f6e4060f96c613446

• Status: Shield Valid ✅ | Unshield Valid ✅

• Redeem Tx: 0x88595cb2b05aa066512292e3484838bd322d83e17aef05da55e95a9ff765a185

• Status: Shield Blocked 🚫 | Unshield Valid ✅

Wallet B ($50,000+ Main Wallet)

• Shield Tx: 0xefd5ae64954fd55cc11fe71d7ee9e543175ea205644791ed4d44e4fd4c3d0e7c

• Status: Shield Valid ✅ | Unshield Valid ✅

• Redeem Tx: 0x319af79f60b841d04819dd588eb6ade93675454de7f23bdf6d665b05af1b4e35

• Status: Shield Blocked 🚫 | Unshield Valid ✅

• Fallback Unshield to Origin Tx: 0x7f7b9b625adbdc076e314981acc58ddcdfffb7f77a84e4ca821210adcf9387ac

• Status: Unshield Missing ❌ (Funds currently held in Relay Adapt Contract)

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Requested Action

1. Manual Contract Release: Inspect transaction 0x7f7b...87ac and manually release/sweep the locked ~49,922.69 USDC from the Relay Adapt contract back to the owner's original public EOA (Wallet B).
2. SDK Edge-Case Patch: Fix the "Unshield to origin" target resolving logic so that fallback routes cannot default to the Relay Broadcaster address.
3. PPOI Vault Protection: Implement a whitelist/isolation mechanism for native DeFi yield vaults to prevent clean user funds from being deadlocked due to external pool mixing.

[tom332]

[tom332]

Note: Attempted to reach out via Telegram, but was automatically kicked by anti-spam bots due to posting transaction logs/hashes. Reporting directly here for Core Dev assistance.

[triamazikamno]

0x7f7b9b625adbdc076e314981acc58ddcdfffb7f77a84e4ca821210adcf9387ac has transferred 49,922.697753 USDC to 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749, which is an EOA that you are probably in control of. Where do you see it being sent to the Relay contract exactly?

[tom332]

Your irresponsibility led to my money being stolen. I have been complaining for 15 days, but you have ignored me.

[tom332]

PROOFS OF RELAYER ACCOUNT OWNERSHIP (Rebuttal to triamazikamno):

Address 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749 is NOT a user EOA. It is a PUBLIC RELAYER / BROADCASTER account used by the RAILGUN network.

As shown in recent block transactions:
• 0xFc2D3c4e...0749 frequently submits multi-transactions directly into Railgun: Relay and RAILGUN: Relay Adapt contracts (Methods: Transact / Relay).
• When "Safely Unshield to origin" was triggered, the SDK resolved the origin to this PUBLIC RELAYER ADDRESS instead of the depositor's actual EOA.
• The 49,922.69 USDC was refunded to the protocol's own Relayer infrastructure address, and was subsequently swept/drained 30 hours ago via tx 0x9868723a4f0...

This is 100% a protocol-level routing/fallback logic vulnerability where user unshield funds are misdirected to public network Relayers rather than the user's origin wallet.

Please escalate this edge-case routing failure to core developers and security maintainers immediately.

[tom332]

EVIDENCE OF ROUTING FAILURE & RELAYER DRAIN (Responding to triamazikamno & tom332):

Please review the attached block explorer screenshots carefully. They provide indisputable proof of a critical protocol routing failure rather than a user key compromise:

1. Address 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749 is NOT my personal EOA. It is a PUBLIC RELAYER / BROADCASTER account interacting continuously with Railgun Relay contracts.
2. 15 Days Ago (Tx 0x7f7b9b625...): The "Safely Unshield to origin" action erroneously routed 49,922.69 USDC into this PUBLIC RELAYER ACCOUNT instead of my originating EOA.
3. 30 Hours Ago (Tx 0x00405de80... & Tx 0x9868723a4f0...): An external address (0x9236BD6A...) injected 0.000499 ETH gas into this public relayer account, instantly sweeping the full 49,922.69 USDC to 0x92362d46a88A371AD.

Conclusion:
My original deposit came from my private EOA. The fallback mechanism misrouted the unshield refund into the protocol's public Relayer infrastructure, where the funds sat exposed and were ultimately swept away.

This is a 100% protocol-level routing logic bug that resulted in user funds being lost from public infrastructure. I request immediate escalation to core security engineers.

[tom332]

URGENT COMPLIANCE & FREEZE REQUEST TO RAILGUN / RAILWAY TEAM:

As proven by the on-chain data, 49,922.697753 USDC was misrouted by the protocol's Safe Unshield mechanism into a PUBLIC RELAYER ADDRESS (0xFc2D3c4e8d186371FAc8A078d64338aF014a0749) and was subsequently swept by an unauthorized address (0x92362d46a88A371AD).

Since the funds CURRENTLY SIT IN THE EXPLOITER'S EOA (0x92362d46a88A371AD) and have NOT yet been swapped or bridged, we have a critical window to freeze these assets via Circle's smart contract blacklist function.

I strongly request the RAILGUN Core Team / Security Team to officially contact Circle Compliance & Law Enforcement Liaison immediately on behalf of the protocol to request an urgent blacklist/freeze of 0x92362d46a88A371AD.

Incidental Details for Circle Submission:
• Stolen Asset: 49,922.697753 USDC
• Exploiter Address: 0x92362d46B3D2DC11fb90a7468c9133aa88A371AD (Currently holding the USDC)
• Exploit Tx Hash: 0x9868723a4f0a08cffb44372d7921b9c836f45049ace163f3f0bcd5a08dd0bca0
• Source/Victimized Relayer Address: 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749 (RAILGUN Public Relayer)
• Incident Description: Protocol fallback routing anomaly misdirected unshielded user funds to a public relayer address, where an automated sweeper bot drained the balance.

Please confirm once the submission/outreach to Circle has been initiated by the security team!

[tom332]

Since you are a developer in the RAILGUN ecosystem with broadcaster expertise, please help escalate this protocol fallback routing issue to the Core Security Committee to freeze the exploiter address (0x92362d46B3D2DC11fb90a7468c9133aa88A371AD) via Circle.

[triamazikamno]

There is no team, RAILGUN is an opensource project with community developed libraries and wallets. If 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749 is not under your control and your wallet has injected it as a destination, I would advise you to contact the wallet support. If it's one of the opensource wallets, try to audit its code and find out how it could have happened. Don't rule out security compromise on your machine.

[triamazikamno]

I think I see what happened: your "redeem" tx 0x319af79f60b841d04819dd588eb6ade93675454de7f23bdf6d665b05af1b4e35 was submitted via a public broadcaster (0xFc2D3c4e8d186371FAc8A078d64338aF014a0749), so when you initiated the refund to origin your wallet has identified the origin as 0xFc2D3c4e8d186371FAc8A078d64338aF014a0749. This is a serious bug if this is the case

[triamazikamno]

I've traced the culprit, this line returns the tx sender:

wallet/src/services/transactions/tx-unshield.ts

Line 322 in 99c9a34

return transaction.from;

Railway blindly ingests this at https://github.com/Railway-Wallet/Railway-Wallet/blob/a99f8ece640afe10ee2b49db07dd0700b9742a39/desktop/src/views/screens/modals/POI/PendingBalancesModal/TxItem/PendingBalancesItem.tsx#L111-L128 and has no further checks for whether you control this address or not.

[tom332]

I reported this problem a long time ago, but your development team won't handle it for me! Look at the screenshot. The most urgent thing now is that the USDC has been transferred from the Railgun contract address to an unknown private address. Your developers need to immediately check whether this unknown address belongs to the developers or a hacker. You need to confirm it immediately. If it doesn't belong to them, report it to the police and have Circle freeze the USDC.

[tom332]

CRITICAL URGENCY NOTICE (Open since Aug 19): Unhandled $50,551 USDC Client Routing Bug

I have submitted this severe fallback routing flaw since August 19. There has been zero technical response across GitHub and Telegram.

To be clear:

1. $50,551 USDC remains publicly trapped inside RAILGUN's Relay Broadcaster Contract (0xFA7093CDD9EE6932B4eb2c9e1cde7CE00B1FA4b9) due to a client fallback implementation error following a strategy vault PPOI blockage.
2. Continued refusal to acknowledge or address a verified client routing flaw that traps user funds inside an official protocol contract severely damages protocol credibility and raises immediate security and compliance red flags.

I demand an immediate technical review of Relay Contract 0xFA7093CDD9EE6932B4eb2c9e1cde7CE00B1FA4b9 by a core maintainer. If this remains unaddressed, all chain records, tickets, and unhandled bug logs will be formally compiled and escalated to external DeFi security auditors and ecosystem reviewers.

[tom332]

**DEMAND FOR IMMEDIATE RESOLUTION & COMPLIANCE ACTION**

Since August 19, this severe client fallback defect has been ignored without any technical acknowledgement. I am officially setting forth two mandatory requirements to resolve this issue:

1. Immediate Refund/Release of Funds:
   A core maintainer must inspect the chain state and provide a technical remedy to immediately refund or release the $50,551 USDC stuck in RAILGUN's Relay Broadcaster Contract (0xFA7093CDD9EE6932B4eb2c9e1cde7CE00B1FA4b9) due to the client fallback routing bug.

2. Compliance Escalation to Circle:
   I demand that the RAILGUN core development team immediately submit a formal incident notice to Circle (the USDC issuer) regarding the compromised/misrouted relay entity (0x92362d46B3D2DC11fb90a7468c9133aa88A371AD), requesting a freeze on any affected stablecoin liquidity tied to this unhandled execution path.

Continued refusal to address this reproducible bug or assist in recovering these validly deposited funds will result in an immediate submission of the full transaction trace, GitHub logs, and node responses to external security auditors and regulators.

[tom332]

This is a screenshot of the issue I submitted to the official Railroad Telegram account on August 19th.