Circle is facing a class action lawsuit over its failure to freeze USDC in the $280 million Drift Protocol hack. As a result, CRCL’s stock price fell and erased almost all of the gains on Thursday after market hours.
The department faces a class action lawsuit in the Drift protocol hack
A Class action lawsuit It was filed in Massachusetts District Court on behalf of Drift Protocol investors who suffered $280 million in losses in the hack. The lawsuit filed by law firm Gibbs Mura, with Joshua McCollum as lead plaintiff, alleges that Circle Internet Financial failed to freeze stolen USDC despite having the technical capacity and contractual authority.
Attackers linked to the North Korean government reportedly blocked more than $230 million in stolen USDC from Solana to Ethereum using Circle’s Cross-Chain Transfer Protocol (CCTP) in more than 100 transactions over the course of eight hours.
Protocol drift detected The perpetrators spent six months posing as a quantitative trading company. The attackers used persistent nonce accounts to pre-sign transactions that delayed execution. On-chain investigator ZachXBT also criticized Circle for not getting involved despite having a multi-hour window during US business hours.
Drift Protocol later announced a $150 million redemption plan in partnership with Tether. The protocol is switching from USDC to USDT as the primary settlement asset.
Circle’s CEO defends the decision
Jeremy Allaire, CEO of Circle, defended the company’s decision, noting that it only freezes USDC based on official law enforcement guidance or court orders. He added that it helps avoid unilateral “ethical dilemmas” and potential legal risks.
“If there are others who think the department should go away from what the law says and do whatever it wants and make its own decisions, then I think it’s a very risky proposition,” Allaire said.
Circle’s CEO has called for safe harbors in proposed legislation such as The law of clarity To clarify the responsibilities of stablecoin issuers in such scenarios. The company has previously faced criticism for freezing unrelated portfolios in other matters.
CRCL stock price decline
Circle’s CRCL stock price fell following the Drift Protocol hack, putting downward pressure on the stock. On Thursday, CRCL’s stock price closed 1.84% higher at $107.46, as Circle’s CEO saw an opportunity to… A stable currency backed by the yuan.
However, CRCL’s stock price fell 1.42% in after-hours trading as the lawsuit surfaced in the media. The stock hit intraday lows and highs of $101.75 and $108.02, respectively. Trading volume fell below the average trading volume of 12 million.
The stock jumped more than 22% this week, reducing the monthly loss to 18%. Circle stock is up nearly 28% since the beginning of the year. Compass cut point CRCL stock price target From $79 to $77, with the rating downgraded from Neutral to Sell amid insider selling by company managers.
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