Circle faces lawsuit as $230M in stolen USDC moved across chains after Drift breach
Circle is being sued for allegedly failing to prevent the transfer of $230M in stolen USDC following the Drift Protocol hack.Summary
Circle is facing a class action lawsuit filed by Drift Protocol investors, alleging negligence in its response to the movement of $230 million in USDC stolen during the April 1 exploit. Plaintiffs argue Circle could have reduced losses by freezing transfers, citing a prior instance where Circle froze USDC-linked wallets. The funds were moved across multiple blockchains using Circle’s Cross-Chain Transfer Protocol, allowing attackers to reposition assets. Industry experts debate the extent of responsibility stablecoin issuers have in freezing assets, balancing legal risks with harm prevention.
Following the exploit, which drained over $285 million from Drift Protocol, the platform is shifting away from USDC and securing $150 million in funding from Tether to compensate affected users and relaunch with USDT as its primary settlement asset. This includes a credit line, liquidity support, and a recovery token for affected users.
The incident raises questions about oversight of cross-chain transactions and the judgment calls stablecoin issuers must make when deciding whether to freeze assets. While Circle has the technical capability to intervene, doing so without a legal order carries regulatory and reputational risks, leading to differing opinions on whether their actions were appropriate.
(Source：Crypto News)