Circle Faces Class Action Lawsuit Over $280M Drift Protocol Exploit Response

Gate News message, April 17 — Circle Internet Group is facing a proposed class action lawsuit in the United States after investors connected to Drift Protocol alleged that the company failed to act quickly enough during an exploit that resulted in approximately $280 million in losses. The legal complaint was filed in a Massachusetts district court by Drift investor Joshua McCollum, who plans to represent more than 100 affected investors.

According to the filing, Circle is accused of allowing attackers to transfer roughly $230 million in USDC from the Solana blockchain to Ethereum using Circle’s Cross-Chain Transfer Protocol (CCTP) over several hours without freezing or blocking the transactions. Plaintiffs argue that Circle had both the technical capability and sufficient time to intervene. The lawsuit also alleges negligence and aiding and abetting conversion. McCollum’s legal team pointed to a previous incident in which Circle froze 16 USDC wallets connected to a sealed U.S. civil case shortly before the Drift exploit, arguing this clearly demonstrates Circle’s ability to intervene when it chooses to do so.

Blockchain analytics firm Elliptic suggested that North Korean state-backed hackers may have been responsible for the exploit. The attackers reportedly used Circle’s bridging technology in more than 100 transactions during normal U.S. business hours, then converted the stolen assets into Ether and sent them through Tornado Cash.

ARK Invest’s director of research for digital assets, Lorenzo Valente, defended Circle’s decision by arguing that once a company begins freezing funds based on subjective judgment, every future case becomes politically and ethically complicated. He noted that deciding which wallets to freeze and which to ignore could expose companies to accusations of bias or selective enforcement.