Drift Degen Sues Circle Alleging Inaction

A new class action lawsuit alleges Circle's sluggish reaction to an April Fools' Day heist helped North Korean hackers make off with $230 million in stolen crypto. Drift degen sues Circle, claiming the stablecoin giant 'did nothing' during the $295m hack.

Background of the Hack

On April 1, hackers drained over $295 million from Drift, a Solana-based trading platform. Investigators have since attributed it to North Korean cybercriminals. The hackers converted various cryptocurrencies pilfered from Drift into USDC, then used Circle's cross-chain transfer protocol (CCTP) to move the stablecoins from the Solana blockchain to Ethereum.

Circle's Alleged Inaction

Freezing Assets

Circle mints USDC and has the power to freeze it, preventing specific wallet addresses from transferring or receiving the tokens. However, the lawsuit alleges Circle 'did nothing as the attackers worked to offload their spoils.' Crypto influencers began tagging Circle in social media posts, alerting them to the ongoing exploit, but Circle allegedly took no action.

$230 million was stolen, with the hackers using Circle's CCTP to convert USDC into Ether, which cannot be frozen or seized by third parties. The lawsuit claims Circle aided and abetted the hackers and was negligent in its behavior.

Expert Opinions

Pseudonymous crypto forensics expert ZachXBT collected 15 examples of hacks in which Circle took 'minimal action against illicit funds.' Circle CEO Jeremy Allaire said the decision to freeze assets shouldn't be made at the company's discretion, but rather after receiving a court order. Lorenzo Valente, director of research at ARK Invest, agreed, stating that a stablecoin that freezes on Twitter pressure is 'a stablecoin where anyone loud enough can trigger action.'

Key Takeaways

• Drift degen sues Circle, alleging inaction during the $295m hack.
• Circle's USDC and CCTP were used by hackers to convert stolen crypto into Ether.
• Experts criticize Circle's reaction to the hack, citing a pattern of inaction.
• Tether, Circle's rival, has taken a more proactive approach to freezing illicit funds.

Frequently Asked Questions

What is the lawsuit against Circle about?

The lawsuit alleges Circle's inaction during the Drift hack helped North Korean hackers steal $230 million in crypto.

How did the hackers use Circle's services?

The hackers used Circle's USDC and CCTP to convert stolen crypto into Ether, which cannot be frozen or seized by third parties.