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

Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a funding package of up to $147.5 million from Tether and its partners. The investment will be used to recover user funds and relaunch the protocol 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 support user recovery and reboot the platform. A portion of the trading revenue will be allocated to a recovery pool to cover roughly $295 million in user losses over time. The exploit, which was linked to a North Korea-based group, led to a significant decline in the value of Drift's governance token, DRIFT. The transition to USDT is seen as a strategic move, given USDT's ability to freeze assets linked to hacks or illicit activities, unlike USDC, which only freezes assets when directed by law enforcement or courts. The competition between USDT and USDC is intensifying, with USDT still leading the stablecoin market but USDC gaining ground due to its regulatory alignment and growing institutional use. With this new funding, Tether plans to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, positioning USDT at the center of its trading infrastructure and providing a pathway to restore user funds and resume operations.