diff --git a/src/app.ts b/src/app.ts
index a233beef46..61dcc3afef 100644
--- a/src/app.ts
+++ b/src/app.ts
@@ -29,14 +29,18 @@ import { rootPath } from './paths';
 import { poolRoutes } from './pools/pools.routes';
 import { ConfigManagerV2 } from './services/config-manager-v2';
 import {
+  clearAuthFailures,
   constantTimeEqual,
   extractBearerToken,
   getBindAddress,
+  isAuthLockedOut,
   isExposedHost,
   isLoopbackAddress,
   isSensitivePath,
   isTrustedLocalAddress,
+  isWeakApiKey,
   loadOrCreateApiKey,
+  recordAuthFailure,
 } from './services/gateway-security';
 import { logger } from './services/logger';
 import { quoteCache } from './services/quote-cache';
@@ -209,15 +213,37 @@ const configureGatewayServer = () => {
   const requireAuth = process.env.GATEWAY_REQUIRE_AUTH === 'true' || !!process.env.GATEWAY_API_KEY;
   if (requireAuth) {
     const gatewayApiKey = loadOrCreateApiKey(`${rootPath()}/conf`);
+    if (isWeakApiKey(gatewayApiKey)) {
+      logger.warn(
+        'GATEWAY_API_KEY is shorter than 16 characters — prefer a high-entropy value (the ' +
+          'auto-generated key is 256-bit). A weak token is brute-forceable from a private-network ' +
+          'source, which the general rate limiter does not throttle.',
+      );
+    }
     logger.info('API-token authentication is enabled for network requests to fund-moving routes.');
     server.addHook('onRequest', async (request, reply) => {
       if (isLoopbackAddress(request.ip)) return; // trusted
       if (!isSensitivePath(request.url)) return; // only gate sensitive routes
+      // Lock out a source that keeps failing the token check. The global rate limiter
+      // allow-lists private-network sources (isTrustedLocalAddress), so without this a
+      // LAN/compose-adjacent attacker could brute-force the token unthrottled (#660 §2).
+      if (isAuthLockedOut(request.ip)) {
+        logger.warn(`Locked out ${request.ip} after repeated failed auth: ${request.method} ${request.url}`);
+        reply.code(429).send({
+          statusCode: 429,
+          error: 'Too Many Requests',
+          message: 'Too many failed authentication attempts; try again later.',
+        });
+        return;
+      }
       const token = extractBearerToken(request.headers['authorization'] as string | undefined);
       if (!constantTimeEqual(token, gatewayApiKey)) {
+        recordAuthFailure(request.ip);
         logger.warn(`Rejected unauthenticated request from ${request.ip}: ${request.method} ${request.url}`);
         reply.code(401).send({ statusCode: 401, error: 'Unauthorized', message: 'Invalid or missing API key' });
+        return;
       }
+      clearAuthFailures(request.ip); // successful auth resets the counter for this source
     });
   }
 
diff --git a/src/services/gateway-security.ts b/src/services/gateway-security.ts
index 1e7b8b2e57..c6f90fe5e5 100644
--- a/src/services/gateway-security.ts
+++ b/src/services/gateway-security.ts
@@ -126,6 +126,63 @@ export function loadOrCreateApiKey(confDir: string): string {
   return key;
 }
 
+/**
+ * Heuristic weak-key check for an operator-supplied GATEWAY_API_KEY. The auto-generated
+ * key is 256-bit (64 hex chars); a short, human-chosen value is brute-forceable — which
+ * matters because the general rate limiter allow-lists private-network sources (see
+ * isTrustedLocalAddress), so a LAN/compose-adjacent client is not throttled on the token.
+ * Pure check — the caller decides how to surface it (we warn, not fail, so an existing
+ * deployment with a short key keeps working).
+ */
+export function isWeakApiKey(key: string): boolean {
+  return key.trim().length < 16;
+}
+
+/**
+ * In-memory failed-authentication lockout for sensitive routes (hummingbot/gateway#660 §2).
+ *
+ * Keyed on the source IP and incremented ONLY on a failed token check, so a correctly
+ * authenticated client — including a sibling-container bot that the general rate limiter
+ * allow-lists — is never affected, while a token-guessing client is locked out after
+ * GATEWAY_AUTH_FAIL_MAX failures within GATEWAY_AUTH_FAIL_WINDOW_MS. This is the control the
+ * global limiter cannot provide: it exempts every private-network source (isTrustedLocalAddress)
+ * and would otherwise give a LAN/compose-adjacent attacker unlimited guesses against the token.
+ *
+ * Scope note: an IP-keyed lockout is a proportionate mitigation for this local/LAN threat
+ * model; it does not by itself stop an attacker able to rotate many source IPs (#660 §2). The
+ * primary defense remains a high-entropy token (the generated key is 256-bit).
+ */
+const AUTH_FAIL_MAX = Math.max(1, Number(process.env.GATEWAY_AUTH_FAIL_MAX ?? 10));
+const AUTH_FAIL_WINDOW_MS = Math.max(1000, Number(process.env.GATEWAY_AUTH_FAIL_WINDOW_MS ?? 15 * 60 * 1000));
+const authFailures = new Map<string, { count: number; resetAt: number }>();
+
+export function isAuthLockedOut(ip: string | undefined, now: number = Date.now()): boolean {
+  const key = ip ?? 'unknown';
+  const rec = authFailures.get(key);
+  if (!rec) return false;
+  if (now > rec.resetAt) {
+    authFailures.delete(key);
+    return false;
+  }
+  return rec.count >= AUTH_FAIL_MAX;
+}
+
+export function recordAuthFailure(ip: string | undefined, now: number = Date.now()): void {
+  const key = ip ?? 'unknown';
+  const rec = authFailures.get(key);
+  if (!rec || now > rec.resetAt) {
+    authFailures.set(key, { count: 1, resetAt: now + AUTH_FAIL_WINDOW_MS });
+  } else {
+    rec.count += 1;
+  }
+}
+
+/** Clear failed-auth state — on a successful auth for that source, or globally in tests. */
+export function clearAuthFailures(ip?: string): void {
+  if (ip === undefined) authFailures.clear();
+  else authFailures.delete(ip);
+}
+
 /**
  * True when Gateway is running inside a container (Docker/Podman). Uses the same markers the
  * Hummingbot API relies on, so the two stay in agreement about the deployment shape.
diff --git a/test/services/gateway-security.test.ts b/test/services/gateway-security.test.ts
index 96fdbc28de..05ef99b67d 100644
--- a/test/services/gateway-security.test.ts
+++ b/test/services/gateway-security.test.ts
@@ -3,15 +3,19 @@ import { tmpdir } from 'os';
 import path from 'path';
 
 import {
+  clearAuthFailures,
   constantTimeEqual,
   extractBearerToken,
   getBindAddress,
+  isAuthLockedOut,
   isExposedHost,
   isLoopbackAddress,
   isPrivateNetworkAddress,
   isSensitivePath,
   isTrustedLocalAddress,
+  isWeakApiKey,
   loadOrCreateApiKey,
+  recordAuthFailure,
 } from '../../src/services/gateway-security';
 
 describe('gateway-security', () => {
@@ -159,4 +163,46 @@ describe('gateway-security', () => {
       }
     });
   });
+
+  describe('isWeakApiKey', () => {
+    it.each(['', 'short', 'a'.repeat(15)])('true for weak key %p', (k) => {
+      expect(isWeakApiKey(k)).toBe(true);
+    });
+    it.each(['a'.repeat(16), 'b'.repeat(64)])('false for strong-length key %p', (k) => {
+      expect(isWeakApiKey(k)).toBe(false);
+    });
+  });
+
+  describe('failed-auth lockout', () => {
+    afterEach(() => clearAuthFailures());
+
+    it('does not lock out below the threshold', () => {
+      const ip = '172.18.0.9';
+      for (let i = 0; i < 9; i++) recordAuthFailure(ip);
+      expect(isAuthLockedOut(ip)).toBe(false);
+    });
+
+    it('locks out at the threshold and is keyed per source', () => {
+      const attacker = '172.18.0.9';
+      for (let i = 0; i < 10; i++) recordAuthFailure(attacker);
+      expect(isAuthLockedOut(attacker)).toBe(true);
+      expect(isAuthLockedOut('172.18.0.10')).toBe(false); // a different source is unaffected
+    });
+
+    it('a successful auth clears the counter', () => {
+      const ip = '10.0.0.5';
+      for (let i = 0; i < 10; i++) recordAuthFailure(ip);
+      expect(isAuthLockedOut(ip)).toBe(true);
+      clearAuthFailures(ip);
+      expect(isAuthLockedOut(ip)).toBe(false);
+    });
+
+    it('the lockout window expires', () => {
+      const ip = '192.168.1.7';
+      const t0 = 1_000_000;
+      for (let i = 0; i < 10; i++) recordAuthFailure(ip, t0);
+      expect(isAuthLockedOut(ip, t0)).toBe(true);
+      expect(isAuthLockedOut(ip, t0 + 16 * 60 * 1000)).toBe(false); // past the default 15-min window
+    });
+  });
 });