Investors impacted by the Drift Protocol hack have filed a class action lawsuit against Circle, alleging negligence and complicity in the hackers' actions.
Joshua McCollum, along with over 100 other investors affected by the Drift Protocol hack, has initiated a class action lawsuit against Circle in Massachusetts. The lawsuit accuses the stablecoin provider of facilitating the hackers' actions and demonstrating negligence.
It is alleged that Circle allowed cybercriminals to transfer around $230 million in USDC to the Ethereum network using its cross-chain transfer protocol, CCTP.
“Circle enabled criminals to misuse its technology. Had the company taken action sooner, these losses could have been avoided or lessened,” stated McCollum's legal team.
The plaintiffs are seeking full compensation, with the total damages to be determined by the court. Legal representatives highlighted that just a week prior to the hack, Circle had frozen 16 addresses as part of a sealed civil case in the U.S., indicating the company's capability to promptly block funds.
On-chain investigator ZachXBT criticized Circle for its delayed response to illegal USDC transactions. After the Drift incident, he reported at least 15 cases of inaction that resulted in $420 million in losses for victims.
Circle's Defense and Community Response
Circle's CEO Jeremy Allaire addressed the situation at a press conference, defending the decision not to intervene. He explained that wallet freezes are only executed at law enforcement's request, warning that bypassing legal procedures could lead to significant ethical dilemmas.
“If someone thinks Circle should disregard the law and act independently, that's a very precarious stance,” Allaire remarked.
Lorenzo Valente, ARK Invest's director of digital asset research, backed Circle's approach, asserting that freezing funds without a court order could lead to arbitrary decisions.
Everyone seems upset with @circle for not freezing the ~$230M in USDC linked to the Drift hacker after the $285M exploit. However, I believe it was the right decision…
— Lorenzo Valente (@LorenzoARK) April 16, 2026
“Every freeze will be a subjective choice. Deciding not to freeze could become a political issue,” Valente warned, acknowledging that stolen funds could potentially support harmful activities.
Bloomberg analyst James Seyffart criticized Circle's rationale, calling it a "weak excuse" that fails to address the core issue of accountability.
“There needs to be a clear stance: either you are decentralized and cannot freeze funds, or you are not and should take action. The argument of only acting with a court order is inadequate,” he stated.
As of this report, Circle has yet to respond to the class action lawsuit. Following the incident, Drift secured $148 million from Tether and other partners to help recover from the hack.
