Key Highlights
- Drift Protocol secured up to $147.5 million from Tether and partners to restart operations after a major exploit.
- The platform will relaunch on Solana and replace USD Coin with Tether as its main settlement asset.
- A recovery plan is in place to help users recover about $295 million in losses.
Drift Protocol is set to replace Circle’s USDC with Tether’s USDT as its main settlement asset when it relaunches on Solana, marking a major stablecoin shift after the April 1 attack linked to North Korean hackers that drained nearly $296 million from the platform.
The move, announced in an X post, comes alongside a proposed support package of up to $147.5 million from Tether and other partners, including recovery funding, market-maker loans, and ecosystem support designed to restart trading and compensate affected users over time.
Funding boost for proper relaunch
The funding plan includes about $127.5 million from Tether and around $20 million from other partners. The money is not just a simple cash injection. It is arranged as a mix of a credit facility tied to future revenue, ecosystem support funds, and loans to market makers who help keep trading active.
The firm said this goal is to make sure the platform has enough support to run smoothly when it comes back online.
Recovery pool for affected users
One major part of the plan is the recovery pool for users. Drift said a part of the money it makes from trading in the future will be added to this pool, along with committed capital, and will be directed into this pool over time.
The goal is to address an estimated $295 million in user losses. The company also noted that any assets recovered through law enforcement or blockchain tracking efforts will be added to the same pool.
To manage the distribution, Drift plans to issue a new transferable token to users affected by the exploit. The token is expected to help distribute recovered value and provide some liquidity options for impacted users. The company said more details on how the token will work will be released later.
How the attack happened
The hack itself was not sudden. According to reports, attackers posed as a quantitative trading firm for about six months before executing the attack. They used social engineering tactics, attended events, and compromised devices through tools like a malicious TestFlight app and a vulnerability in development software.
The attackers then manipulated internal approvals to access and drain core vaults holding assets, including USDC and SOL. Estimates place the total loss between $270 million and $285 million.
Crypto space criticizes Circle for not freezing stolen USDC
During the incident, about $232 million in USDC was moved across chains. This led to criticism of Circle, the issuer of USDC. Some in the crypto community argued that faster action could have slowed the movement of funds.
In response, Circle maintained its policy. CEO Jeremy Allaire, according to a previous report, said that wallets are frozen only when directed by law enforcement. The company stated it does not act independently during active hacks due to legal constraints.
Meanwhile, the decision to switch to USDT also comes as stablecoin competition grows. USDT currently leads the market with a larger supply, while USDC has gained traction through regulatory alignment and an increase in transaction volume. Drift said the new structure places USDT at the center of its system as it works to restart operations.
The company also outlined new security steps before relaunch. These include independent audits from firms such as OtterSec and Asymmetric Research, as well as a community-governed multisig system. Under the new setup, all signers will use dedicated devices and verify transactions outside primary interfaces.
In the statement shared publicly, Drift said: “These funds… are designed to fund a dedicated user recovery pool.” It added, “This is the first step toward making users whole over time.”
Also Read: Drift Protocol Reveals North Korean State Hackers Behind $285M Exploit
