Circle Hit With Class Action Lawsuit Over $285M Drift Protocol Hack

USDC issuer Circle has been hit with a class action lawsuit from Drift Protocol investors who lost money during the April 1 exploit that saw $285 million drained from the the Solana DeFi platform.

The suit, filed on April 14, accuses Circle Internet Financial of failing to freeze stolen funds during the exploit.

The lawsuit centers on an eight-hour window during which attackers moved $232 million in USDC from Solana to Ethereum using Circle’s Cross-Chain Transfer Protocol. The hackers had exploited Drift Protocol through pre-signed administrative transfers using “durable nonces,” a legitimate Solana feature they weaponized weeks before the April 1 attack.

Drift Protocol subsequently linked North Korean state-affiliated hackers to the attack, noting that they had infiltrated the company over the course of six months by posing as a quantitative trading firm.

The incident prompted sharp criticism of Circle from within the crypto community, with blockchain investigator ZachXBT accusing the firm of having been “asleep,” during the Drift exploit, adding, “Why should crypto businesses continue to build on Circle when a project with 9 fig TVL could not get support during a major incident?”

Circle maintains it acted appropriately within legal constraints. “Circle is a regulated company that complies with sanctions, law enforcement orders, and court-mandated requirements,” a company spokesperson said. Earlier this week, CEO Jeremy Allaire warned that unilateral freezing decisions outside established legal processes could create a “significant moral quandary.”

Chief Strategy Officer Dante Disparte reinforced this position in a blog, stating that, “when Circle freezes USDC, it is not because we have decided, unilaterally or arbitrarily, that someone’s assets should be taken from them. It is because the law requires us to act.”

While Circle defended its position, Drift Protocol secured recovery commitments of up to $127.5 million from Tether and $20 million from other partners on Thursday. Tether CEO Paolo Ardoino positioned his firm as more responsive, stating that, “Tether’s role in the digital assets ecosystem is to provide a platform for individuals and institutions alike that is ready to step forward to help the industry in the moment of darkness.”

The legal action arrives amid broader concerns about stablecoin issuers’ responsibilities in combating illicit finance. TRM Labs data shows around $141 billion in stablecoin transactions last year were linked to illicit activity including sanctions evasion and money laundering, while ZachXBT has documented approximately $420 million in suspicious USDC flows since 2022 that went unblocked.

Circle reported soaring USDC circulation and transaction volume figures in its Q4 2025 report, with Allaire claiming that the firm would grow in tandem with the artificial intelligence industry, and “drive the greatest acceleration of economic activity we’ve ever seen in human history.”