This proposal requests a treasury spend of 40,507,741.068941973566 BSX to reimburse 115 KSM that was permanently trapped due to a confirmed bug in the xTokens pallet used by Basilisk after the Kusama Asset Hub migration.

The reimbursement amount is calculated based on the BSX/KSM exchange rate at the moment of referendum creation, providing a transparent and fair conversion.
![image_2025-11-17_13-36-44.png](https://subsquare.infura-ipfs.io/ipfs/Qma8nw6dwu1mRwaFrpChNAcuPFa58CxkveR45HLTsWhRxG)

**Background**

On 2025-10-17 at 11:28:06 UTC, I initiated a transfer of 115 KSM from Basilisk to Kusama using the standard UI/XCM workflow.

The 115 KSM were successfully deducted from my Basilisk account.

However, the tokens never reached either Kusama Relay Chain or Kusama Asset Hub.

This failure occurred because the xTokens pallet on Basilisk incorrectly selected the reserve chain as Kusama Relay Chain instead of Kusama Asset Hub (KAH).
This regression was introduced during the migration, and Basilisk did not update the xTokens pallet in time, leading to an invalid routing path and permanent loss of user funds.

This issue has been acknowledged as a pallet bug rather than user error.

**On-chain Evidence**

Basilisk XCM message:
https://basilisk.subscan.io/xcm_message/kusama-e18e63ffa2fe1c620cf95519af4cb5d3626f719c

Relevant Kusama event:
https://kusama.subscan.io/event/30564530-37

These links show that the XCM execution failed due to incorrect reserve chain targeting and that no corresponding credit was made on the destination chain.

**Rationale for Reimbursement**
- The loss was caused by a Basilisk chain-level bug, not user error.
- Funds were irreversibly destroyed in the process.
- Treasury reimbursement is the only possible remedy.
- This approach has precedent across ecosystem parachains when chain logic errors cause user losses.

**Closing Note**

This proposal is not only about individual reimbursement but also about maintaining user trust in Basilisk’s technical guarantees. The funds were lost strictly due to a pallet implementation issue following the migration, and a treasury remedy would demonstrate commitment to user safety and accountability.

I respectfully ask the Basilisk governance community to support this proposal.

#41 [Spender] Reimbursement of 115 KSM Lost Due to xTokens Pallet Bug

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