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 plans to relaunch with Tether's USDT as its primary settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The funding package, which includes up to $127.5 million from Tether and $20 million from other partners, is designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, Drift relied on 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, posing as a quantitative trading firm for about six months before executing the exploit on April 1. Drift's governance token, DRIFT, has lost around 70% of its value since the exploit. The incident sparked criticism of Circle 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. However, Circle's CEO, Jeremy Allaire, explained that the company only freezes USDC wallets when directed by law enforcement or courts, citing legal risks. In contrast, Tether has a history of freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's transition to USDT is seen as a strategic move in the intensifying competition among stablecoin issuers. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to enhance trading depth at relaunch.