Circle faces a class action lawsuit alleging it failed to freeze approximately $230 million in stolen USDC following a $280 million exploit of the Drift Protocol. The suit, filed in a Massachusetts district court by investor Joshua McCollum on behalf of over 100 affected users, claims the stolen stablecoin was bridged from Solana to Ethereum over several hours without intervention. Plaintiffs argue Circle demonstrated negligence and the technical capability to act, having frozen wallets in previous cases.
Circle is facing a class action lawsuit after allegedly failing to freeze stolen USDC linked to a major exploit involving Drift Protocol. Investor Joshua McCollum initiated the suit in a Massachusetts district court, accusing Circle of negligent behavior after the hack.
The complaint alleges that attackers exploited Drift Protocol and stole approximately $280 million in digital assets. Nearly $230 million in USDC was reportedly bridged from Solana to Ethereum using Circle’s Cross-Chain Transfer Protocol over several hours.
The lawsuit accuses Circle of negligence and aiding unlawful conversion by failing to block suspicious transactions. Plaintiffs argue the firm had both technical capability and regulatory responsibility to freeze the assets.
Legal representatives highlighted that Circle had previously frozen multiple USDC wallets in a separate case, demonstrating its technical ability to intervene. This argument suggests inconsistency in enforcement actions by the stablecoin issuer.
The case highlights the emerging grey area concerning centralized companies operating within decentralized finance systems. Attorneys stated that timely action could have significantly reduced losses, emphasizing Circle’s alleged inaction during the exploit.
Meanwhile, Drift Protocol is preparing to relaunch following the exploit, with plans to discontinue USDC and transition to Tether for settlements. The lawsuit’s outcome could influence future regulatory expectations for stablecoin issuers.
