Tether announces $150M recovery program for Drift Protocol
TL;DR
Tether is launching a $150 million recovery program for the Drift Protocol decentralized exchange after an exploit in April. The plan includes $127.5 million from Tether and aims to restore user balances as trading activity resumes.
Key points
- Tether announces a $150 million recovery program for Drift Protocol
- The program includes $127.5 million from Tether
- Recovery linked to ongoing trading activity on Drift platform
Mentioned in this story
Stablecoin issuer Tether, the company behind USDt (USDT), said Thursday it will back a $150 million recovery program for the Drift Protocol decentralized exchange (DEX) following an exploit of the platform in April.
The recovery plan for the $280 million Drift Protocol exploit includes $127.5 million from Tether, with the rest coming from undisclosed partners, according to Tether’s announcement. Tether said:
“Rather than relying on upfront capital alone, the structure links funding and recovery to ongoing trading activity on the Drift platform, allowing user balances to be restored as the exchange returns to normal operations.”
The Drift Protocol platform will “contribute directly” to the ongoing recovery of user funds as the platform resumes normal trading activity.
The top 10 crypto assets stolen from the Drift Protocol in the exploit. Source: Quill Audits
Drift will also transition its settlement asset from Circle's USDC (USDC) dollar-pegged stablecoin to Tether’s USDt as part of the platform’s relaunch.
Cointelegraph reached out to Tether but did not receive a response by the time of publication.
The recovery program highlights a growing trend of crypto industry companies collaborating to restore user funds and help platforms resume normal operations after major hacks or cybersecurity attacks that cause hundreds of millions of dollars in losses.
Related: Drift sends onchain message to wallets tied to $280M exploit
Circle comes under fire for not freezing funds after Drift Protocol attack
Crypto industry executives, cybersecurity researchers and blockchain security firms criticized Circle for not freezing the USDC wallets linked to the Drift Protocol exploiter, despite having a window of several hours to intervene.
The exploiter used Circle’s Cross-Chain Transfer Protocol (CCTP), a native bridge that allows tokens to be transferred to other blockchain networks, to transfer over $232 million USDC from the Solana network to the Ethereum network, according to onchain sleuth ZachXBT.
Source: ZachXBT
The funds were transferred in more than 100 transactions, he said, adding, “Despite the attacker laundering funds over six consecutive hours across Circle's own native bridge, no USDC was frozen. The attacker has been linked to North Korea by Elliptic.”
Circle’s stock sank by about 10% on April 9, following criticism over the company’s failure to freeze the funds from the hack and downgraded forecasts from market analysts. The NYSE-traded shares have since clawed back that decline, increasing about 20% as of yesterday’s close, according to Yahoo Finance data.
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Q&A
What is the Drift Protocol recovery program by Tether?
The Drift Protocol recovery program is a $150 million initiative by Tether to restore user funds following an exploit that occurred in April.
How much money is Tether contributing to the Drift Protocol recovery?
Tether is contributing $127.5 million to the $150 million recovery program for the Drift Protocol.
What happened to the Drift Protocol in April 2023?
In April 2023, the Drift Protocol decentralized exchange experienced an exploit that led to significant financial losses, prompting the need for a recovery program.
