It runs in a sandboxed virtual machine, the EVM. There is still the issue of the halting problem. But programs that would run infinitely have a finite amount o

It runs in a sandboxed virtual machine, the EVM. There is still the issue of the halting problem. But programs that would run infinitely have a finite amount of gas, and will eventually stop executing. Even if you staged an attack using a large sum of ether to fund a large amount of gas, the EVM still has a hard limit on the number of computational steps per block. There is also still the issue of a developer writing a buggy contract (see the DAO exploit). But static analyzers and automated proofs can help address this in the future.