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

Drift Protocol, recently victimized by a North Korean exploit, has announced plans to relaunch with USDT as its settlement layer after securing a substantial funding package of up to $147.5 million from Tether and its partners. The funding deal, which includes $127.5 million from Tether and $20 million from other partners, is structured to facilitate user recovery from the April 1 exploit and reboot the platform as a USDT-based perpetual futures exchange on Solana. Prior to the exploit, 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 in the wake of a North Korea-linked group infiltrating Drift Protocol, resulting in an exploit exceeding $270 million on April 1, which led to Drift's governance token, DRIFT, losing around 70% of its value. Circle faced criticism from the crypto community for its perceived reluctance to halt the money transfer following the exploit, during which the attacker transferred approximately $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. In response to the criticism, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts, reflecting Circle's strategy to closely align with regulators and institutions. In contrast, USDT has demonstrated a greater ability to freeze funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and roughly $150 billion in cumulative trading volume, Drift offers a range of services including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The competition in the stablecoin market is intensifying, with exchanges, fintechs, and traditional financial institutions competing to control the on-ramps, liquidity, and settlement layers that underpin digital asset markets. While USDT still maintains a significant lead in the stablecoin market, with approximately $185.5 billion in supply compared to USDC's $78.6 billion, Circle's transaction volume has surpassed Tether's in recent months as its market share expands. The new funding package will also enable Tether to fund fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to bolster trading depth at relaunch. This strategic move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.