- Circle is being sued over its handling of the Drift exploit
- Plaintiffs claim it failed to freeze stolen USDC in time
- Circle says it only acts under legal orders
- Case highlights tensions around control in stablecoins
Investors Take Legal Action
Circle is facing a class action lawsuit from investors affected by the recent Drift exploit, which resulted in around $280 million in losses.
The lawsuit claims Circle failed to act quickly enough to freeze stolen USDC, even though it had the ability to do so.
Allegations Focus on Delayed Response
According to the complaint, a large portion of the stolen funds was moved before any action was taken. Critics argue that faster intervention could have reduced losses.
The case also points out that Circle had previously frozen wallets in other situations, raising questions about consistency.
Circle Defends Its Position
Circle CEO Jeremy Allaire responded by saying the company only freezes funds when instructed by law enforcement or courts.
He warned that acting independently could create legal and ethical risks.
Wider Impact on Crypto
The case highlights a key issue in crypto, how much control stablecoin issuers should have over user funds, especially during hacks.
Meanwhile, Drift Protocol is working on a recovery plan backed by external funding.
