A class action lawsuit has been filed against Circle Internet Group, the issuer of the USDC stablecoin, for allegedly failing to prevent the movement of stolen funds related to the Drift Protocol exploit.
The lawsuit, initiated by Drift investor Joshua McCollum on behalf of over 100 affected users, questions whether Circle had the ability and responsibility to intervene during the exploit.
Legal Action Against Circle
The lawsuit stems from the breach of Drift Protocol in April 2026, where attackers siphoned off approximately $285 million, with a significant portion converted into USDC.
Transfers of the stolen funds across different chains were not immediate, occurring over several hours and through numerous transactions.
The lawsuit alleges that Circle could have frozen the wallets or stopped the transfers to mitigate the losses but failed to do so, leading to accusations of negligence.
Questions are raised about the responsibilities of a centralized entity operating within a decentralized system.
Recovery Plan by Drift Protocol
Drift Protocol has outlined a recovery plan to address user losses, aiming to mobilize up to $147.5 million, with a portion backed by Tether and other partners.
The plan includes a revenue-linked credit facility of around $100 million, where funds will be drawn gradually from future trading fees and platform revenue for repayments.
A new recovery token will be issued to affected users to represent their share of the recovery pool, allowing for gradual repayments or immediate sale for liquidity.
The recovery pool will be replenished through protocol revenue, partner contributions, and potential funds recovered from the attackers.
Despite the efforts, there is a significant gap between total losses and the targeted recovery amount, indicating that users may not be fully reimbursed immediately.
The success of the recovery plan depends on Drift’s ability to regain user trust, restore liquidity, and sustain long-term repayments through revenue generation.
Part of the recovery framework includes restoring liquidity by incentivizing market makers to improve trading conditions once the platform resumes full operations.
Drift Protocol has decided to shift from USDC to USDT as its primary settlement asset, reflecting a strategic reassessment of risk and infrastructure restructuring.
The recovery plan focuses on gradual restitution rather than immediate payouts, emphasizing the importance of rebuilding trust and generating sustainable revenue.
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