DeFi's Cross-Chain Weakness Exposed in $2.4M Nemo Protocol Hack

Nemo Protocol, a blockchain-based platform operating on the Sui Network, suffered a significant security breach resulting in a loss of $2.4 million in USDC assets. The incident, reported by PeckShieldAlert on September 8, 2025, revealed that the attacker exploited vulnerabilities to transfer stolen USDC from the Arbitrum blockchain to Ethereum via Circle’s bridging infrastructure. This breach underscores ongoing risks in decentralized finance (DeFi) protocols, particularly in cross-chain operations where assets are moved across different blockchain ecosystems. The attack method mirrors similar exploits observed in other DeFi platforms, such as the Cetus DEX incident, where extensive recovery efforts were required to mitigate losses. However, no public statements or remedial actions have been released by Nemo Protocol or the Sui Network team, raising concerns about transparency and asset protection in blockchain protocols.

The breach highlights the persistent challenges in securing DeFi infrastructure, despite recent advancements in blockchain technology. The Sui Network, which claims to offer high-speed transactions and improved scalability, now faces scrutiny over its security measures. Sui is designed to handle thousands of transactions per second using a delegated Proof-of-Stake (dPoS) consensus model and a parallel processing architecture, which differentiates it from slower chains like Ethereum. However, the recent hack of Nemo Protocol suggests that vulnerabilities can still be exploited, particularly in cross-chain bridges and smart contract implementations. PeckShieldAlert attributed the incident to weaknesses in the protocol’s handling of USDC transfers, emphasizing the need for more robust security frameworks to prevent such exploits.

The USDC stablecoin, a key asset in the DeFi ecosystem, was the primary target of the attack. USDC, which is currently valued at $1.00 with a market cap of $72.55 billion, has maintained relative stability despite the breach. According to CoinMarketCap, the token experienced a minor 24-hour price change of -0.13%, with its dominance in the stablecoin market remaining at 1.89%. While the attack did not significantly impact the broader stablecoin market, it raises concerns about liquidity risks on platforms like Sui, where USDC is a frequently traded asset. Coincu Research noted that such incidents could prompt regulatory bodies to emphasize stricter security protocols, potentially leading to the adoption of more advanced technological defenses in DeFi platforms.

The lack of immediate public response from Nemo Protocol and the Sui Network team has further fueled concerns about accountability in blockchain ecosystems. Unlike traditional financial institutions, DeFi protocols often operate without centralized oversight, making it difficult to trace and recover lost funds. In this case, the attacker successfully moved USDC through a cross-chain bridge, a process that typically requires multiple cryptographic verifications. The absence of real-time monitoring and automated response mechanisms allowed the breach to occur with little resistance. This incident serves as a wake-up call for DeFi platforms, highlighting the need for proactive security measures such as multi-signature wallets, real-time anomaly detection, and regular smart contract audits.

Looking ahead, the DeFi community may see a shift toward enhanced security standards to address vulnerabilities exposed by incidents like the Nemo Protocol hack. Coincu Research suggested that regulatory bodies could play a more active role in setting security benchmarks for DeFi platforms, particularly those handling large volumes of stablecoin transactions. Additionally, developers may adopt more secure programming languages and frameworks to reduce the risk of exploitable code. As the blockchain industry continues to mature, the balance between innovation and security will be critical to maintaining investor confidence and ensuring long-term growth in the DeFi sector.

Source:

[1] PeckShield: Nemo Protocol on Sui suffers $2.4 million loss (https://www.panewslab.com/en/articles/678bcc72-ed58-4518-b65c-7714bec966d4)

[2] Nemo Protocol Hacked on Sui Network; $2.4 Million USDC ... (https://coincu.com/news/nemo-protocol-hack-sui-network/)