Circle Sued Over Alleged Failure to Freeze Stolen USDC

A class action lawsuit has been filed against Circle Internet Financial by Drift Protocol investors who lost funds in the April DeFi hack.

The suit alleges that Circle failed to freeze stolen USDC funds during the $280 million exploit, despite having the technical and contractual authority to do so. The plaintiffs point to a separate matter where Circle froze 16 unrelated wallets just nine days before the Drift exploit as evidence of their claim.

Circle's chief executive, Jeremy Allaire, has defended the company's actions, stating that it only freezes USDC wallets at the direction of law enforcement or the courts and does not act unilaterally in private matters. He framed the issue as a broader governance question, arguing that taking action outside established legal processes could create a 'significant moral quandary' for any stablecoin issuer.