Tether extends $127M to crypto platform Drift as critics blast Circle for not freezing stolen funds
Tether lends $127M to Drift, a Solana-based crypto platform recovering from a $285M hack, amid criticism of Circle for not freezing stolen funds.
Tether is no stranger to leveraging its vast financial resources, and this week it has made headlines for a significant move. The stablecoin giant has stepped in as a lender of last resort by extending $127.5 million in funding to Drift, a Solana-based derivatives exchange that suffered a massive hacking incident earlier this month, resulting in a loss of $285 million to North Korea–linked hackers.
Why Is Tether Funding Drift?
The funds provided by Tether comprise both loans and grants aimed at aiding Drift’s recovery. While they won't fully cover the extent of the loss, this financial injection is intended to offer stability as Drift embarks on its journey to recover. The exchange has promised to contribute its own revenue towards making its users whole once again, an effort that has garnered appreciation from the crypto community, especially among Solana blockchain users.
What Went Wrong for Drift?
The breach at Drift was not just another hacking incident; it was a sophisticated attack. According to company statements, the attackers managed to gain the team’s trust by posing as a legitimate trading firm during a cryptocurrency conference in late 2025. This allowed them to infiltrate Drift’s systems and execute a theft of substantial funds.
How Are Users Responding?
In the wake of the hacking, many users have criticized Circle, the issuer of USDC, for not freezing the stolen funds. Drift customers accuse Circle of negligence, claiming that the firm could have intervened to prevent the hackers from converting stolen assets into USDC and escaping the blockchain without consequence. Circle’s CEO, Jeremy Allaire, defended the company’s stance, indicating that freezing assets without direction from law enforcement presents a “moral quandary.”
What's the Impact on Stablecoins?
Tether’s decisive action appears to have created a shift within the stablecoin landscape, especially on the Solana blockchain. Following Tether's announcement, there was a notable change; some users, including Nicky Scannella of Solana’s marketing group, reported swapping substantial amounts of USDC for Tether's USDT to express their dissatisfaction with Circle’s response. “If we want to see more of this…we as users need to actually act. It’s sorta like voting,” Scannella emphasized.
What Are the Numbers Telling Us?
According to DefiLlama data, USDC and USDT experienced a slight decline and gain, respectively, in supply on the Solana blockchain following Tether’s pledge of support. Currently, USDC maintains a stablecoin supply of approximately $8.1 billion on Solana versus USDT's $3 billion. Despite this, Tether still reigns supreme in the overall stablecoin market with a market cap of $185 billion, compared to Circle’s $78 billion.
What Lies Ahead for Drift?
As Drift prepares for its relaunch, the exchange has indicated it will transition to using USDT for its settlement processes instead of USDC. This change not only signifies a growing reliance on Tether but also highlights how the recent events have influenced the operational strategies of companies involved in decentralized finance.
Key Takeaways
- Tether extended $127.5 million in funding to Drift after a significant hack resulted in a $285 million loss.
- The hack was executed by North Korea–linked hackers through a sophisticated scheme that involved gaining the trust of Drift’s team.
- Users criticized Circle for not freezing stolen USDC during the breach, leading to a comparison with Tether's proactive response.
- Drift will now use USDT for settlement, marking a shift away from USDC.
- Tether's market cap remains significantly higher than Circle’s, with $185 billion compared to $78 billion.
This situation highlights the complex interplay between security, trust, and the evolving landscape of stablecoins in the crypto ecosystem. For traders looking to delve into this dynamic market, competitive rates can be found across various exchanges, including Binance, Bybit, and Bitget.