CRCL Stock Price Falls as Investors Sue Circle Over $280M Drift Protocol Hack

Circle is being sued in a class-action lawsuit filed in Massachusetts District Court by investors who lost funds in the $280 million Drift Protocol hack. The lawsuit, led by Joshua McCollum and represented by Gibbs Mura, alleges that Circle failed to freeze stolen USDC despite possessing the technical ability and contractual authority to do so. Attackers, reportedly linked to North Korea, transferred over $230 million in stolen USDC using Circle’s Cross-Chain Transfer Protocol (CCTP).

Circle CEO Jeremy Allaire defended the company’s decision not to freeze the funds, stating they only act on formal law enforcement or court orders to avoid legal risks. He advocates for legislative clarity, such as through the CLARITY Act, to define stablecoin issuers’ responsibilities in similar situations. The company previously faced criticism for freezing wallets in other instances.

Following the lawsuit’s emergence, Circle’s CRCL stock price fell 1.42% in after-market hours on Thursday, reversing earlier gains. Despite a 22% increase this week and a nearly 28% year-to-date rally, Compass Point downgraded CRCL from neutral to sell and lowered its price target from $79 to $77 due to insider selling. Drift Protocol is implementing a $150 million recovery plan and transitioning from USDC to USDT as its primary settlement asset.

(Source：CoinGape)