Over $280 million in drift hacks, hit the circle with the action suit
Circle Internet Group is testifying in a class action lawsuit led by a Drift Protocol investor alleging it failed to block funds stolen in a $280 million protocol exploit on April 1.
The lawsuit, filed last Wednesday in US District Court in Massachusetts by Drift investor Joshua McCollum on behalf of more than 100 members, alleges that Circle allowed the attackers to transfer an estimated $230 million USDC from Solana to Ethereum over Circle's Cross-Chain Transfer Protocol (CCTP) for several hours without interference.
Attorneys representing McCollum wrote that “Circle allowed this technology and services to be used criminally.”
The suit accuses Circle of aiding and abetting conversion and negligence. Mira Gibb, a law firm representing McCollum and other Drift investors, is seeking bankruptcy, the final amount of which will be determined at trial.
The issue concerns the legal gray area surrounding crypto companies that have control over user funds. While such companies may have the technical ability to intercept or block assets, they often cite regulatory constraints or the lack of immediate legal authority as reasons for inaction – making accountability clear when real-time exploits occur.
McCollum's lawyers pointed out that Circle filed a US civil suit in connection with the suspension of 16 USDC wallets a week before the drift event to argue that Circle had the technical capacity to do the same.
Cointelegraph reached out to Circle for comment, but did not receive an immediate response.
Crypto analytics firm Elliptic suspects the exploit was carried out by North Korean government-backed hackers, who executed more than 100 transactions using Circle's bridging technology during business hours in the US, where the stablecoin company is based.
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The funds were converted to Ether (ETH) and sent through Tornado Cash's privacy protocol to trap and obfuscate the trail.
A circle is set in a lost place: ARK Invest
While Circle has faced backlash for its inaction, Lorenzo Valente, director of digital assets research at ARK Invest, argued on Thursday that it made the right decision, arguing that freezing funds without a legal order opens the door to arbitrary decisions.
“Every future freeze is now a judgment call. Every unfroze is a political statement. Why the drift hacker but not that sketchy Nigerian scam bag? Why this opposition but not that one?”
While Valente sided with Circle's decision, he speculated that the stolen money could be used to support North Korea's nuclear weapons program:
“Whether the Circuit gets it right depends on how much it weighs rule-of-law principles against actual harm. Reasonable people would disagree.”
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