Drift Leverages Tether for $148M Redemption Plan, Dumps Circle’s USDC After DeFi Exploit

Drift Protocol said Thursday that it is allying itself with Tether as the stablecoin issuer supports recovery efforts associated with that exploit It cost users $285 million in cryptocurrency Earlier this month.

In an announcement, the decentralized exchange said it is set to receive $127.5 million from Tether and $20 million from other partners, in a framework that includes a revenue-linked credit facility, an ecosystem grant, and loans to market makers.

As part of this arrangement, Drift Protocol plans to transfer committed funds into a so-called redemption pool, in addition to exchange revenue. Drift added that affected users are set to receive a transferable token representing a claim on the redemption pool.

The result is that the drift gives up Circle’s USDC stablecoin When the stock exchange is relaunched, with recognition Leading stablecoin USDT from Tether As a basic leveling layer. The El Salvador-based company behind the $185 billion product is also expected to provide resources to make the market.

In a blog post, CEO Paolo Ardoino said the company’s work with Drift is focused on “restoring user trust and supporting a strong relaunch.”

Although Tether’s USDT did Gained a good reputation As a preferred means for bad actors to move money, the company noted in the blog post that it works with 10 law enforcement agencies in 64 countries, and has recovered $800 million in stolen cryptocurrencies as a result.

Two weeks ago, when hackers Associated with the Democratic People’s Republic of Korea After quickly stealing assets from Solana-based Drift, onlookers watched massive amounts of cryptocurrency flow into Ethereum using Circle’s Cross-Chain Transfer Protocol, or CCTP — a process that took several hours.

Since Circle made no effort to freeze the funds that flowed through its protocol, the stablecoin issuer faced opposition online. A blockchain investigator with the pseudonym ZachXBT was among those who accused The company on the X was essentially asleep at the wheel.

Last week, a Circle V executive wrote: Blog post The company only freezes digital assets when required to do so by law, “not because we have decided, unilaterally or arbitrarily, that someone’s assets should be taken from them.”

Conversely, Dante Disparte, chief strategy officer and head of global policy at Circle, described the US Treasury’s efforts to implement rules for stablecoin issuers under the GENIUS Act, a federal framework. Released last yearas a potential bright spot.

The department urged Congress to consider the “reservation law” in A a report Published last month, it would expand legal protections for institutions that “temporarily and voluntarily hold digital assets involved in suspected illegal activity during a short-term investigation.”

Under the proposed rule, the Treasury Department He said recently The GENIUS Act would require companies like Circle to build systems to combat money laundering and evade sanctions. However, no reference was made to the detention law recommended by the agency previously.