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Circle Internet Group is facing a class action lawsuit after a reported $280 million exploit of Drift Protocol on April 1, according to the complaint filed in Massachusetts district court by investor Joshua McCollum on behalf of more than 100 members.
The lawsuit alleges that Circle allowed attackers to transfer roughly $230 million in USDC from Solana to Ethereum through its Cross-Chain Transfer Protocol. The filing argues that losses would have been reduced if Circle had taken timely action to freeze or otherwise intervene.
Attorneys for McCollum claim Circle “permitted this criminal use of its technology and services,” and argue that “these losses would not have occurred, or would have been substantially reduced, had Circle taken timely action.” The law firm Mira Gibb is seeking damages, with the final amount to be determined at trial.
The complaint accuses Circle of negligence and aiding and abetting conversion. It also highlights a legal grey area in which crypto companies may retain control over user funds while deciding whether to freeze assets.
Crypto analytics firm Elliptic suspected North Korean state-backed hackers carried out the exploit. The attackers allegedly made more than 100 transactions using Circle’s bridging technology during US working hours. The stolen funds were later converted into Ether and routed through the Tornado Cash privacy protocol to launder proceeds.
McCollum’s lawyers said Circle had previously frozen 16 USDC wallets. They linked that action to a sealed US civil case filed about a week before the Drift incident, arguing it demonstrates Circle had the technical capacity to intervene and that the company chose not to act rather than being unable to do so.
The lawsuit also references expectations that Drift Protocol will abandon USDC after its relaunch. The platform plans to switch to USDT for settlement going forward.
ARK Invest’s director of research for digital assets, Lorenzo Valente, defended Circle’s decision not to freeze funds. He argued that freezing without a legal order can enable arbitrary discretion.
Valente wrote that “Every future freeze is now a judgment call. Every non-freeze is a political statement,” questioning how issuers would decide which wallets to freeze. He framed the issue around rule-of-law principles that should govern stablecoin issuers.
At the same time, Valente acknowledged the scale of the theft and speculated that the proceeds will likely support North Korea’s nuclear weapons program. On whether Circle acted correctly, he said: “Whether Circle got it right comes down to how much you weigh rule-of-law principles vs concrete harm. Reasonable people disagree.”
The case is presented as part of a broader accountability gap in the crypto industry, where companies with technical control over funds may cite regulatory constraints when deciding not to act during real-time exploits. The outcome could influence future stablecoin governance disputes, particularly around issuer intervention policies.
Circle has not yet issued a public statement responding to the lawsuit filing.
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