Drift Secures $148 Million in Funding to Recover from Exploit and Transition to USDT

Following a significant exploit linked to North Korea, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. The package, which includes $127.5 million from Tether and $20 million from other partners, is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, Drift utilized Circle's USDC as its settlement layer. The rescue package comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. The funding comes after a North Korea-linked group infiltrated Drift Protocol, resulting in an exploit of over $270 million on April 1. Drift's governance token, DRIFT, has since lost around 70% of its value. The incident sparked criticism towards Circle for its handling of the exploit, particularly its decision not to halt the transfer of funds. In response, Circle's CEO, Jeremy Allaire, emphasized that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, USDT has demonstrated a more agile approach to freezing funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of roughly $150 billion. Founded in 2021, the platform offers a range of services, including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The stablecoin market is becoming increasingly competitive, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT maintains a significant lead, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption. The new funding package will enable Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers. This move positions USDT at the core of Drift's trading infrastructure, paving the way for the restoration of user funds and the resumption of operations.