Tether Unveils $150M Fund to Aid Drift Protocol Recovery Efforts
Following a $280 million security breach in April, Drift Protocol will utilize $150 million in funding to resume operations and reimburse affected users.
On Thursday, Tether, the organization responsible for issuing the USDt (USDT) stablecoin, revealed plans to support a $150 million recovery initiative for the Drift Protocol decentralized exchange (DEX) in the aftermath of an April security breach targeting the platform.
According to Tether's official statement, the compensation strategy for the $280 million Drift Protocol security incident encompasses $127.5 million contributed by Tether, while additional partners whose identities remain undisclosed will provide the remaining funds. In their announcement, Tether stated:
"Rather than relying on upfront capital alone, the structure links funding and recovery to ongoing trading activity on the Drift platform, allowing user balances to be restored as the exchange returns to normal operations."
As the Drift Protocol platform gets back to regular trading operations, it will make "direct contributions" toward the continuous restoration of user funds.
As part of the platform's reboot, Drift will make a switch in its settlement asset, moving away from Circle's USDC (USDC) dollar-backed stablecoin and adopting Tether's USDt instead.
Although Cointelegraph attempted to contact Tether for comment, no response had been received at the time this article was published.
This recovery initiative underscores an emerging pattern within the cryptocurrency sector where companies work together to help reimburse users and assist platforms in returning to regular operations following significant hacking incidents or cybersecurity breaches that result in losses amounting to hundreds of millions of dollars.
Circle comes under fire for not freezing funds after Drift Protocol attack
Leaders in the crypto sector, security researchers specializing in cybersecurity, and blockchain protection companies expressed strong disapproval of Circle's decision not to freeze USDC wallets associated with the Drift Protocol attacker, even though the company had multiple hours available to take action.
According to blockchain investigator ZachXBT, the perpetrator leveraged Circle's Cross-Chain Transfer Protocol (CCTP), which functions as a native bridge enabling tokens to move between different blockchain networks, to move more than $232 million in USDC from the Solana blockchain to the Ethereum blockchain.
According to his findings, the stolen assets were moved through more than 100 separate transactions. He further noted, "Despite the attacker laundering funds over six consecutive hours across Circle's own native bridge, no USDC was frozen. The attacker has been linked to North Korea by Elliptic."
On April 9, Circle's stock price dropped by approximately 10% in response to backlash regarding the company's inability to freeze the stolen funds and following revised projections from market analysts that were less optimistic. However, the NYSE-listed shares have since recovered from that downturn, rising roughly 20% by yesterday's market close, based on data from Yahoo Finance.