Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things sports. In this post I will be looking at how Nemo Protocol are issuing NEOM Debt tokens following the recent attack by a rouge developer which depegged their stablecoin.
Nemo Protocol Issues NEOM Debt Tokens
The Nemo Protocol have issued the NEOM debt token in an effort to compensate $2.6M exploit victims. The debt token will be a 1:1 USD peg for the TVL which fell from $6.3M to $1.57M following a rogue developer attack. The NEOM debt program was launched after the Sui-based DeFi platform was attacked on the 7th of September. There will be one NEOM token given for every lost dollar and it will allow victims to claim debt tokens while migrating remaining assets to secure multi-audited contracts.
The hack which saw $2.6M taken happened when a rouge developer secretly deployed unaudited code which contained critical vulnerabilities. This allowed it to bypass internal review processes through single-signature deployment. The attacker exploited flash loan functions incorrectly exposed as public and query functions that could modify contract state without authorization.
Users withdrew over $3.8 million worth of USDC and SUI tokens following the breach as the total value locked collapsed from $6.3 million to $1.57 million. The exploit happened on the same day that SwissBorg had a $41.5 million SOL hack and the same day of the Yala stablecoin depeg attack.
An investigation following the attack revealed systematic security failures dating to January 2025 when the unnamed developer submitted code containing unaudited features to MoveBit auditors. The developer also failed to highlight new additions while mixing previously audited fixes with unreviewed functionality to create a compromised foundation.
Back in August Asymptotic team identified the critical C-2 vulnerability which meant a single-signature address rather than audit-confirmed hashes could confirm established review protocols entirely and modify code without permission. When the team was warned they choose to dismiss the concern and failed to implement necessary fixes despite available support from security partners.
https://x.com/nemoprotocol/status/1967419055729787236
The recovery program will include three steps. The first is asset migration which allows users to transfer residual value from compromised pools to new secure contracts through one-click actions.
Users will also receive NEOM debt tokens pegged 1:1 to their USD losses determined by pre-hack snapshots.
Finally NEOM will inject value into NEOM through a multi-tiered redemption waterfall model, with recovered hacker funds forming the primary source for proportional claims. There will also be external capital injections, such as liquidity loans and strategic investments.
The stolen assets from Neom Protocol moved through sophisticated laundering operations via Wormhole CCTP before final aggregation on Ethereum. Security teams established monitoring protocols for holding addresses while coordinating with centralized exchanges on potential asset freezing measures.
Have a great day.
Peace. CryptoGod-1.
