NemTokenV2 Liquidity Pool Accounting Exploit

On October 22, 2026, the NemTokenV2 contract — a BNB Chain token traded on PancakeSwap and unrelated to the native NEM/XEM blockchain — was exploited for approximately $822,000. The loss stemmed from a logic flaw in the token's own code, not a stolen key or an outside dependency. Security firms SlowMist and CertiK flagged the incident the same day, with SlowMist estimating the damage at about $821,920.

What happened

NemTokenV2 embedded a custom "sell-recycle" accounting mechanism in its transfer logic. The contract treated any transfer of tokens into its PancakeSwap liquidity pair as sell volume without verifying that a swap had actually settled. Because the pair's real token balance could exceed its recorded reserves, that surplus was skimmable.

The attacker exploited the gap in a tight loop: sending NEM into the USDT/NEM pool, calling skim() to clear the surplus, and invoking the token's flushLpSellRecycle() routine. SlowMist reported the sequence was repeated roughly 42 times, steadily shrinking the pool's NEM reserves and inflating the token's price. The attacker then sold the remaining NEM at the distorted price for USDT and bridged the proceeds to Ethereum.

Aftermath

As of the first disclosures, the NemTokenV2 team had published no official statement, named no fix, and reported no recovered funds. SlowMist said it had published the attacker, exploit-contract, and token addresses, but the public reporting did not reproduce them, and no confirmed transaction hashes or attacker identity were established.

Why it matters

The NemTokenV2 loss is a reminder that a token's own transfer hooks are attack surface. Bespoke "tax," "reflection," or "recycle" logic that mutates liquidity-pool accounting on every transfer invites exactly this class of bug: when a contract trusts its internal bookkeeping over the AMM's settled state, an attacker can manufacture phantom sell volume and skim the difference. It is the same reserve-and-price distortion seen in Papertrade and Tectonic, and it underscores why self-accounting token contracts should reconcile against the pair's real balances — never the other way around.