A Massachusetts class-action lawsuit targets Circle Internet Group over the Drift Protocol hack, alleging the company failed to freeze roughly $230 million of USDC moved after the approximately $280 million exploit that drained a Solana-based exchange and spilled across blockchains to Ethereum via Circle’s CCTP.

Plaintiffs claim Circle had both the technical capability and contractual authority to intervene and freeze the stolen funds, but did not act during the seven- to eight-hour window when assets were moved and converted.

The case situates the Drift incident within broader debates about DeFi liability, operator discretion, and how crypto asset control is evolving amid active exploits.

advocates like ARK Invest’s Lorenzo Valente defend Circle’s choice to refrain from freezing without a legal order, framing it as avoiding arbitrary discretion while acknowledging the ongoing debate over the right approach.

The funds moved through ecosystems and were laundered, complicating enforcement and tracking as authorities and firms grapple with balancing rule-of-law constraints and immediate harms in hacks.

The lawsuit underscores concerns about centralized control over stablecoins and the potential security implications of cross-chain mechanisms during hacks.

The Drift incident triggered cascading effects, with losses and suspensions affecting at least 20 other DeFi protocols through indirect exposure.

Plaintiffs allege Circle aided and abetted conversion and negligence, seeking damages to be determined at trial and highlighting accountability questions when firms can intervene but cite regulatory limits.

The case references Circle having recently frozen 16 unrelated wallets nine days earlier in a sealed civil matter, suggesting the firm’s capability and willingness to act in certain contexts.

That prior action is cited to argue Circle could have frozen Drift-related assets, illustrating capabilities demonstrated in other scenarios.

Elliptic analyses indicate the exploit involved North Korean state-backed actors moving funds across chains, with conversions to ETH and routing through Tornado Cash to obfuscate the trail.

Drift announced a recovery package totaling up to $127.5 million from Tether and additional funding from other partners to support user recovery and Drift’s relaunch as a USDT-based perpetual DEX on Solana.