Blockchain security firm CertiK has reported a significant exploit involving an unverified smart contract linked to TMX Tribe, a decentralized perpetual futures exchange operating on Arbitrum and Optimism. The incident, which occurred between January 5 and January 6, 2026, resulted in an estimated $1.4 million loss, raising fresh concerns around unverified contracts and DeFi protocol security. According to CertiK, the attacker exploited flaws in the contract’s liquidity pool (LP) staking and swapping logic, repeatedly looping transactions to drain funds. The exploit highlights how design oversights in smart contracts, particularly those not formally verified, can expose protocols to large-scale asset losses. CertiK publicly disclosed the incident through its monitoring platform, warning users to exercise caution and avoid interacting with related contracts while investigations continue. #CertiKInsight We have seen a ~$1.4M exploit on an unverified contract related to @TMXTribe on Arbitrum. In an exploit loop, the exploiter mints and stakes TMX LP with USDT, swaps USDT for USDG, unstakes, and sells more USDG. The tactic has been repeated many times to drain… pic.twitter.com/jC6LzcxpmY — CertiK Alert (@CertiKAlert) January 6, 2026 Exploit Targets Unverified Contract Infrastructure At the center of the incident is an unverified contract associated with TMX Tribe. Unlike verified contracts, which allow public inspection of source code, unverified contracts obscure internal logic, making it harder for users and auditors to assess risk before interacting. CertiK’s analysis indicates that the attacker leveraged weaknesses in how the contract handled LP token minting, staking, and asset swaps. The lack of proper checks and balances allowed repeated execution of a manipulative transaction loop without triggering safeguards. Security analysts emphasize that unverified contracts often present elevated risk, particularly when they control liquidity or interact directly with user funds. In this case, the contract’s flawed logic enabled the attacker to recycle capital repeatedly, amplifying losses over time rather than relying on a single exploit transaction. Looping Exploit Drains Liquidity Step By Step The attacker executed a repeated exploit loop that took advantage of the contract’s internal accounting. The process followed a consistent pattern: First, the attacker minted and staked TMX LP tokens using USDT, gaining exposure to the liquidity pool. Next, the deposited USDT was swapped for USDG, an internal or associated asset within the protocol’s ecosystem. Once the swap was completed, the attacker unstaked the LP tokens, reclaiming liquidity while retaining the swapped assets. In the final step, the attacker sold or drained the acquired USDG, extracting value from the pool. This loop was executed multiple times in rapid succession. Each cycle incrementally drained assets from the protocol, allowing the attacker to scale the exploit without deploying additional capital. Over time, the repeated execution resulted in significant losses across multiple tokens. Security firm QuillAudits later highlighted the looping behavior as a textbook example of how flawed state management and missing validation checks can be abused in DeFi systems. Multiple Assets Drained Across The Attack The exploit did not target a single asset. Instead, the attacker drained a range of tokens from the affected pools. Primary losses included USDT, a widely used stablecoin, as well as wrapped SOL and WETH. The diversity of drained assets suggests that the exploit impacted shared liquidity or interconnected pools, rather than a siloed contract. Wrapped assets, in particular, often serve as bridges between ecosystems, making them attractive targets due to their liquidity and ease of conversion. By extracting value across multiple token types, the attacker maximized flexibility in moving or laundering funds after the exploit. This pattern aligns with previous DeFi attacks where attackers prioritize assets with deep liquidity and broad market acceptance. Root Cause Points To Missing Safeguards Preliminary analysis points to fundamental flaws in the contract’s logic, specifically around how minting, staking, and swapping operations were handled. The contract appears to have lacked sufficient validation mechanisms to prevent repeated or manipulative execution of the same transaction flow. Without proper accounting controls, the contract allowed assets to be minted, swapped, and withdrawn in ways that should not have been possible under normal conditions. These gaps effectively enabled infinite or near-infinite drainage until liquidity was exhausted or the exploit was detected. Security experts note that such vulnerabilities often arise when contracts are deployed without comprehensive audits or formal verification. In fast-moving DeFi environments, pressure to ship features quickly can lead to incomplete safeguards, increasing exposure to sophisticated attackers. Security Recommendations For Users And DeFi Participants In response to the incident, security firms have issued a series of recommendations aimed at reducing user exposure to similar exploits. Users are strongly advised to avoid interacting with unverified contracts associated with TMX Tribe or similar projects until a full post-mortem is released. Any existing approvals or permissions granted to suspicious contracts should be revoked immediately using tools such as Revoke.cash. Monitoring official communication channels is also critical. Protocol teams typically release updates, remediation plans, or compensation details after incidents, and users should rely on verified sources rather than third-party speculation. More broadly, the exploit reinforces standard DeFi best practices. Users should employ hardware wallets where possible, carefully verify contract addresses, and limit token approvals to only what is necessary for each interaction. The TMX Tribe exploit serves as another reminder that while decentralized finance offers open access and innovation, it also demands vigilance. As attackers continue to refine their techniques, security awareness remains one of the most effective defenses. Disclosure: This is not trading or investment advice. 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