Circle, the issuer of the stablecoin USDC, is now facing a class action lawsuit from investors of the Drift Protocol. The suit stems from the April 1 exploit where an estimated $285 million was drained from the Solana-based decentralized finance platform.
The lawsuit, filed on April 14, specifically targets Circle's handling of the incident. Investors allege that hackers were able to move $232 million in USDC through Circle's own Cross-Chain Transfer Protocol from Solana to Ethereum during an eight-hour window. The attackers reportedly exploited a legitimate Solana feature, "durable nonces," to execute the breach.
Drift Protocol has linked North Korean state-affiliated hackers to the attack, stating they had infiltrated the platform over six months by posing as a quantitative trading firm.
Circle maintains its stance that it only freezes assets when legally compelled to do so. A company spokesperson stated, "Circle is a regulated company that complies with sanctions, law enforcement orders, and court-mandated requirements." Chief Strategy Officer Dante Disparte further clarified that asset freezes are enacted only when legally required, not unilaterally.
In contrast, Drift Protocol has secured recovery commitments totaling up to $127.5 million from Tether and $20 million from other partners. Tether's CEO, Paolo Ardoino, highlighted his firm's responsiveness in assisting the industry during crises.
This legal action comes amid broader scrutiny of stablecoin issuers' roles in combating illicit finance. Data indicates significant stablecoin transactions linked to illicit activities, with concerns raised about unblocked suspicious USDC flows.