Drift gets $148 million funding from Tether and partners as it replaces Circle stablecoin with USDT after massive exploit

Drift Protocol, the victim of a recent North Korean exploit, plans to relaunch with Tether’s $USDT as its settlement layer after securing a proposed funding package of up to $147.5 million from the stablecoin issuer and partners, the companies said on Thursday.

The deal includes up to $127.5 million from Tether and $20 million from the other partners, structured to support user recovery following Drift’s April 1 exploit and to reboot the platform as a $USDT-based perpetual futures exchange on Solana. Previously, the platform used Circle’s stablecoin $USDC as its settlement layer.

The rescue package combines a revenue-linked credit facility, ecosystem grants and loans to market makers. A portion of trading revenue, alongside committed capital, will be directed to a recovery pool aimed at covering roughly $295 million in user losses over time.

The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before carrying out an exploit that was more than $270 million on April 1. Drift’s governance token, DRIFT, has lost about 70% of its value since the exploit.

Circle came under fire from the crypto community for its seeming unwillingness to halt the money transfer after the exploit. The attacker moved about $232 million in $USDC from Solana to Ethereum using Circle’s cross-chain transfer protocol. Some critics, including blockchain investigator ZachXBT, said Circle could have moved faster to blacklist wallets and freeze funds to prevent (or at least slow down) the attacker from moving the assets.

However, Circle’s didn’t take any such actions due to legal risks.

Its CEO, Jeremy Allaire, later said that his company freezes $USDC wallets only when directed by law enforcement or courts, not in real time during hacks. The approach reflects Circle’s broader strategy to align closely with regulators and institutions.

Its rival, $USDT, meanwhile, is more nimble at freezing funds. The stablecoin issuer has repeatedly frozen assets linked to hacks or other illicit activities previously.

Drift is the largest decentralized perpetual futures exchange on Solana, with more than 175,000 users and roughly $150 billion in cumulative trading volume. Founded in 2021, it offers perpetuals, spot trading, lending, borrowing and cross-margin trading.

Stablecoin war

Competition in stablecoins is intensifying as exchanges, fintechs, and traditional financial institutions race to control the on-ramps, liquidity, and settlement layers that underpin digital asset markets.

Circle’s $USDC has been steadily chipping away at Tether’s long-standing dominance of the stablecoin market, gaining share on the back of regulatory alignment and growing institutional use.

While $USDT still leads by a wide margin, according to CoinDesk data, with roughly $185.5 billion in supply versus about $78.6 billion for $USDC, Circle’s transaction volume outpaced Tether’s in recent months as its market share expanded.

With the new funding package, Tether also plans to fund fee reductions and user incentives tied to Drift’s transition to $USDT, while extending liquidity support to designated market makers to bolster trading depth at relaunch.

Drift said the move positions $USDT at the center of its trading infrastructure while providing a pathway to restore user funds and resume operations.

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