Stablecoin issuer Circle Internet Group is facing a class action lawsuit over its handling of the $280 million Drift Protocol exploit, with investors alleging it failed to freeze stolen funds.
The suit claims Circle allowed around $230 million in USD Coin to be transferred across chains using its Cross-Chain Transfer Protocol without intervention.
“Circle permitted this criminal use of its technology and services,”
Lawyers representing the plaintiffs said.
The case alleges negligence and aiding unlawful fund conversion, arguing that losses could have been reduced if Circle had acted more quickly to block transactions.
The incident highlights a legal grey area around whether crypto firms should intervene in real-time hacks, especially when they have the technical ability but lack clear legal authority. Following the announcement the Circle position was unchanged at $XX.
Some analysts argue Circle avoided setting a dangerous precedent by not freezing funds without a court order, while others say inaction worsened investor losses.
The lawsuit adds to growing scrutiny of stablecoin issuers and their role in preventing illicit activity as regulators and courts grapple with accountability in decentralised finance.