Submitted by Jeiwan, also found by ronnyx2017
Users might become victims of a false positive: if they use a fresh account as an NFT recipient during contract registration, the transaction wont revert, but the registered contract will never earn fees for the token holder. And since a contract can be registered only once, there wont be a way for affected users to re-register contracts and start earning fees. This can affect both bigger and smaller projects that register their contracts with the Turnstile contract: the only condition for the bug to happen is that the recipient address thats used during registration is a fresh address (i.e. an address that hasnt been used yet).
The register function allows the calling contract to specify the address that will receive the freshly minted NFT (Turnstile.sol#L86):
A recipient address can be any address besides the zero address. However, on the consensus layer, theres a stricter requirement (event_handler.go#L31-L33): a recipient address cannot be a fresh account, that is an address that:
While, on the application layer, calling the register function with a fresh address will succeed, on the consensus layer a contract wont be registered. 
When a Register event is processed on the consensus layer, theres a check that requires that the recipient address is an existing account in the state database (event_handler.go#L31-L33):
If the recipient account doesnt exist, the function will return, but the register transaction wont revert (errors during the events processing doesnt result in a revert: evm_hooks.go#L123-L132, evm_hooks.go#L49).
The GetAccount function above returns nil when an address doesnt exist in the state database. To see this, we need to unwind the GetAccount execution:
Thus, a new account object in the state database is only created when an address receives native coins, sends a transaction (which increases the nonce), or when contract code is deployed at it.
Example Exploit Scenario
Consider removing the only existing recipient account check in the RegisterEvent handler since it creates a discrepancy between the application and the consensus layers. Otherwise, if its mandatory that receiver addresses are not fresh, consider returning an error in the PostTxProcessing hook (which will revert a transaction) if there was an error during events processing.
tkkwon1998 (Canto) confirmed and commented:
