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 new settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The deal, 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, replacing Circle's USDC as its settlement layer. The funding package combines 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 roughly $295 million in user losses over time. 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 widespread criticism of Circle, whose cross-chain transfer protocol was used by the attacker to move approximately $232 million in USDC from Solana to Ethereum. In response to the incident, Drift's governance token, DRIFT, has lost around 70% of its value. The funding from Tether and its partners will also be used to fund fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to bolster trading depth at relaunch. This move is seen as a strategic play by Tether to expand its market share in the stablecoin market, where competition is intensifying among exchanges, fintechs, and traditional financial institutions.