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Drift gets $148 million funding from Tether and partners as it replaces Circle stablecoin with USDT after massive exploit
TL;DR
Drift Protocol has secured $148 million in funding from Tether and partners to relaunch using USDT after a significant exploit. The funding aims to support user recovery and transition to a USDT-based perpetual futures exchange on Solana.
Key points
- Drift Protocol secured $148 million in funding
- Funding includes $127.5 million from Tether
- Drift is switching from USDC to USDT
- The exploit caused over $270 million in losses
- A recovery pool will address user losses
Mentioned in this story
Drift ProtocolTetherCircle
Drift Protocol, the victim of a recent North Korean exploit, plans to relaunch with Tether's USDT as its settlement layer after securing a proposed funding package of up to $147.5 million from the stablecoin issuer and partners, the companies said on Thursday.
The deal includes up to $127.5 million from Tether and $20 million from the other partners, structured to support user recovery following Drift’s April 1 exploit and to reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, the platform used Circle's stablecoin USDC as its settlement layer.
The rescue package combines a revenue-linked credit facility, ecosystem grants and loans to market makers. A portion of trading revenue, alongside committed capital, will be directed to a recovery pool aimed at covering roughly $295 million in user losses over time.
The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before carrying out an exploit that was more than $270 million on April 1. Drift's governance token, DRIFT, has lost about 70% of its value since the exploit.
Circle came under fire from the crypto community for its seeming unwillingness to halt the money transfer after the exploit. The attacker moved about $232 million in USDC from Solana to Ethereum using Circle’s cross-chain transfer protocol. Some critics, including blockchain investigator ZachXBT, said Circle could have moved faster to blacklist wallets and freeze funds to prevent (or at least slow down) the attacker from moving the assets.
However, Circle's didn't take any such actions due to legal risks.
Its CEO, Jeremy Allaire, later said that his company freezes USDC wallets only when directed by law enforcement or courts, not in real time during hacks. The approach reflects Circle's broader strategy to align closely with regulators and institutions.
Its rival, USDT, meanwhile, is more nimble at freezing funds. The stablecoin issuer has repeatedly frozen assets linked to hacks or other illicit activities previously.
Q&A
How much funding did Drift Protocol receive from Tether?
Drift Protocol received up to $127.5 million from Tether as part of a total funding package of $148 million.
What stablecoin is Drift Protocol using after the exploit?
Drift Protocol is replacing Circle's USDC with Tether's USDT as its settlement layer.
What was the extent of the exploit on Drift Protocol?
The exploit on Drift Protocol resulted in losses exceeding $270 million, linked to a North Korea-associated group.
What measures are being taken to recover user losses on Drift?
A recovery pool funded by trading revenue and committed capital will aim to cover approximately $295 million in user losses over time.
