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Over 100 investors, led by Joshua McCollum, have initiated a class action lawsuit in the Massachusetts District Court against the issuer of the USDC stablecoin, Circle. The plaintiffs claim that the company failed to take measures to block stolen funds following the hacking of the Drift protocol on the Solana blockchain.
According to the lawsuit, the case involves USDC transactions amounting to approximately $230 million, linked to the April Fool’s Day breach of the Drift protocol. The funds were moved across various blockchains within hours using Circle’s cross-chain infrastructure, which the plaintiffs argue provided the company with the opportunity to intervene. They assert that timely intervention could have mitigated the extent of the losses.
The law firm Mira Gibb, representing the plaintiffs, accused Circle of negligence and complicity in the unlawful appropriation of funds. The final amount of damages will be determined during the legal proceedings. The lawsuit notes that on March 23, about a week prior to the attack on Drift, Circle froze USDC on 16 crypto addresses as part of another civil case. According to the plaintiffs, this indicates that the company had the technical capability to block assets.
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The attackers extracted over $285 million from the Drift protocol, which exceeded 50% of the total value of assets locked at that time. According to DeFiLlama, this figure later decreased to $251 million from a peak of $1.5 billion in September 2025. The stolen funds were converted into stablecoins, including USDC, and then partially transferred to Ethereum and exchanged for Ether. Subsequently, a portion of the funds passed through the crypto mixer Tornado Cash. Analysts from Elliptic suggested that North Korean hackers may have been behind the attack.
Lorenzo Valente, the director of digital asset research at ARK Invest, highlighted that the situation raises questions about the accountability of stablecoin issuers. He stated that Circle has the ability to freeze assets at the contract level; however, using this power without a court order could jeopardize the company’s reputation.
“Each such asset freeze requires careful consideration. Every decision not to freeze is a political statement. For instance, why was the hacker who breached Drift blocked, but not some dubious crypto address belonging to a Nigerian scammer? Why this address and not that one?” Valente contemplates.
Previously, Circle’s CEO Jeremy Allaire stated that the company would only block addresses with USDC at the request of law enforcement or by court order. He believes that a private company does not have the moral authority to make such decisions independently.
