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 funding package of up to $147.5 million from Tether and its partners. This investment will facilitate the recovery of user funds and 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 support user recovery and reboot the platform. A portion of trading revenue will be allocated to a recovery pool to cover user losses over time. The exploit, which occurred on April 1, was carried out by a North Korea-linked group and resulted in the loss of approximately $295 million in user funds. The incident led to criticism of Circle for not halting the transfer of funds, with some arguing that the company could have moved faster to blacklist wallets and freeze assets. In response, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts. The shift to USDT is seen as a strategic move, with Tether being more agile in freezing funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift has over 175,000 users and a cumulative trading volume of roughly $150 billion. The company 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. The move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.