Circle CEO blames ‘ethical dilemma’ for not acting on $280 million drift exploit

Allaire defended Circle’s inaction during the exploitation, noting that Circle only acts when required to do so by law.

Stablecoin issuer Circle has doubled down on its defense against criticism for failing to act during an exploit that led to nearly $280 million in losses from the Solana-based Drift protocol.

This time, the company’s CEO, Jeremy Allaire, He responded During a press conference in Seoul, South Korea, he pointed to an ethical dilemma. The CEO insisted that Circle cannot decide what is right or wrong, and can only follow the rule of law when freezing wallets containing crypto assets. Due to the ethical dilemma, Circle was unable to quickly freeze assets stolen from Drift Protocol.

Drift exploitation worth $280 million

It’s no longer news that Drift Protocol lost millions of dollars earlier this month, as the vulnerability rocked the industry. In a post-mortem analysis, the Drift team revealed that the incident was due to a coordinated attack, and not a flaw in the smart contract.

The attacker gained unauthorized access to administrative permissions associated with the protocol’s security council through social engineering that began approximately seven days before the incident. After obtaining 2 out of 5 multisig approvals, inserting malicious assets, and removing withdrawal limits, the exploiter was able to enable pre-signed transactions days later.

Market experts linked the attack to the notorious North Korean hacking group Lazarus. While investigations are still ongoing, on-chain investigators like ZachXBT He believes The damage from the attack could have been reduced if Circle had frozen the stolen funds during the exploitation window.

The attackers moved $230 million in USDC coins from Solana to Ethereum via Circle’s Cross-Chain Transfer Protocol (CCTP). The transfer took place in approximately 100 transactions. According to ZachXBT, Circle had the potential to do so Freeze USDC, but chose to remain “asleep” instead, while the funds were moved over the course of several hours without interruption.

An ethical dilemma for the department

In defending Circle’s inaction during the exploitation, Allaire said Circle only takes such actions under obligation under the law. He added that it would be a risky proposition to expect a stablecoin issuer to deviate from what the law says to make its own decisions. While the company is working with regulators to provide clarity on taking precautionary measures under extreme circumstances, the CEO insisted that Circle cannot make such decisions.

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Meanwhile, Circle is expanding its presence in Korea. The company signed memorandums of understanding with Upbit and Bithumb, the largest exchanges in South Korea, to increase the adoption of USDC in the local cryptocurrency market.