Circle Hit With Class Action After $285 Million Drift Hack
Circle is facing a class-action lawsuit following last month’s exploit of Drift Protocol, in a case that could test the legal responsibilities of stablecoin issuers in responding to crypto hacks.
Summary:
- Circle is sued for failing to freeze over $230 million in stolen USDC.
- Plaintiffs argue the firm had time and capability to act.
- The case could set precedent for stablecoin issuer liability.
The complaint, filed April 14 in a U.S. federal court in Massachusetts, alleges that Circle failed to act during a critical window as hackers moved funds through its infrastructure. The suit was brought on behalf of investor Joshua McCollum and more than 100 affected users.
Allegations Focus on Missed Intervention Window
At the center of the case is Circle’s handling of funds linked to the April 1 exploit, which resulted in losses of about $285 million.
Plaintiffs claim that between $230 million and $232 million in USDC was transferred using Circle’s Cross-Chain Transfer Protocol. The transactions reportedly occurred over roughly eight hours during U.S. business hours.
Lawyers argue this provided sufficient time for intervention. They claim Circle had both visibility into the transactions and the technical ability to freeze the assets.
The lawsuit accuses the company of negligence and aiding and abetting by allowing the transfers to proceed.
Claims of Selective Enforcement
A key argument in the complaint centers on Circle’s past actions.
Plaintiffs point to a recent incident in which the company froze 16 wallets tied to a separate legal case. That action took place days before the Drift exploit.
According to the lawsuit, this demonstrates that Circle can freeze funds when it chooses to. The plaintiffs argue that the decision not to act in this case reflects inconsistent enforcement.
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They contend that this inconsistency contributed to the scale of losses.
Links to State-Sponsored Hackers
Investigations into the exploit have tied the attack to the Lazarus Group, a hacking organization linked to North Korea.
Blockchain analysts, including firms such as TRM Labs and Elliptic, said the attackers used social engineering tactics over several months to gain access.
The lawsuit emphasizes that a large portion of the stolen funds moved through Circle’s infrastructure before reaching other networks.
That detail is central to the argument that the company played a role in enabling the transfer of illicit funds.
Circle Cites Legal Constraints
Circle has indicated that its policy is to act only when there is formal legal authorization.
Chief Strategy Officer Dante Disparte has said freezing funds without a court order or law enforcement request could set a problematic precedent. The company argues that such actions could undermine the neutrality of financial infrastructure.
The lawsuit challenges that position. It claims Circle has previously acted more quickly in other cases and has delayed responses in multiple incidents over recent years.
Potential Legal and Industry Impact
The case is being closely watched across the crypto industry. It raises a broader question about whether stablecoin issuers have a duty to intervene in real time during hacks.
If the court sides with the plaintiffs, it could expand the responsibilities of firms that operate blockchain-based payment systems. That may lead to stricter expectations around monitoring and responding to suspicious activity.
The outcome could also influence how stablecoin issuers balance compliance with the decentralized nature of crypto markets.
For now, the case adds to the growing scrutiny facing infrastructure providers as digital asset markets continue to mature.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
