Drift Secures $148 Million in Funding from Tether and Partners to Recover from Exploit

Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a proposed funding package of up to $147.5 million from Tether and its partners. This investment will facilitate the recovery of user funds and support the relaunch of the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to cover roughly $295 million in user losses over time. A portion of the trading revenue, alongside committed capital, will be allocated to a recovery pool to achieve this goal. The exploit, which occurred on April 1, was carried out by a North Korea-linked group that had infiltrated Drift Protocol by posing as a quantitative trading firm for about six months. The incident led to a significant loss of value for Drift's governance token, DRIFT, which has plummeted by around 70% since the exploit. Circle, the issuer of USDC, faced criticism for its handling of the situation, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated its ability to freeze assets linked to hacks or illicit activities promptly. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of roughly $150 billion. The platform offers a range of services, including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The funding package also includes plans for fee reductions and user incentives tied to Drift's transition to USDT, as well as liquidity support for designated market makers to enhance trading depth at relaunch. This move is expected to position USDT at the center of Drift's trading infrastructure, providing a pathway for the platform to restore user funds and resume operations.