Drift Protocol has secured up to $150 million in funding led by Tether as it pivots to USDT following a massive exploit that impacted user funds.
Key Takeaways
- Drift Protocol secures nearly $150 million from Tether and partners to support user recovery.
- Platform will replace USDC with USDT as its settlement layer after the exploit.
- A revenue driven recovery pool will help repay up to $295 million in user losses over time.
- The move highlights growing competition between USDT and USDC in the stablecoin market.
What Happened?
Drift Protocol suffered a major exploit on April 1, with losses estimated between $270 million and $280 million, following a prolonged infiltration linked to a North Korea associated group. In response, the platform has now secured a recovery package led by Tether and is preparing for a relaunch using USDT instead of USDC.
Today, Drift is announcing a collaboration with @tether and other partners totaling up to nearly $150 million to support our commitment to a relaunch with USDT at the center, and a path to user recovery.
— Drift (@DriftProtocol) April 16, 2026
These funds encompass a $100M revenue-linked credit facility, an ecosystem…
Recovery Plan Backed by Tether
Drift has announced a strategic collaboration with Tether and other partners, with total proposed funding reaching up to $147.5 million. This includes $127.5 million from Tether and $20 million from additional partners.
The recovery structure is built around a revenue linked credit facility, ecosystem grants, and loans to market makers. A significant portion of future trading revenue, along with committed capital, will be directed into a dedicated recovery pool.
This pool is designed to gradually address approximately $295 million in user losses, offering a structured and long term path toward reimbursement rather than immediate payouts.
Drift also plans to introduce a new transferable token for affected users, though details are yet to be revealed.
Cindy Leow, Co-Founder of Drift, said:
Shift From USDC to USDT
As part of the relaunch, Drift will transition away from Circle’s USDC and adopt USDT as its primary settlement asset.
This decision comes after criticism directed at Circle during the exploit. Attackers reportedly moved around $232 million in USDC across chains, and many in the crypto community argued that faster intervention could have slowed or prevented fund movements.
Circle CEO Jeremy Allaire later clarified that the company only freezes funds when instructed by law enforcement, citing legal constraints.
In contrast, Tether has historically taken a more proactive approach in freezing illicit funds, which may have influenced Drift’s decision.
Tether CEO Paolo Ardoino stated:
Relaunch Strategy and Market Impact
Drift plans to relaunch as a USDT-based perpetual futures decentralized exchange on Solana, supported by liquidity from Tether and incentives such as reduced trading fees.
Additional support will include liquidity facilities for market makers, aimed at ensuring deep and stable trading conditions from day one.
Despite the setback, Drift remains a major player in the ecosystem, with over 175,000 users and roughly $150 billion in cumulative trading volume.
The incident also intensified the ongoing stablecoin competition. While USDT maintains a significant lead in total supply, USDC has been gaining traction through regulatory alignment and institutional adoption.
CoinLaw’s Takeaway
In my experience, this situation clearly shows how infrastructure decisions in crypto can shape trust overnight. Drift’s shift to USDT is not just technical, it is strategic. I found that users care deeply about how quickly platforms respond in crisis moments, and this incident exposed a major gap.
Tether stepping in with capital and operational support signals confidence, but also highlights how stablecoin issuers are becoming central power players in the ecosystem. If Drift executes this recovery plan well, it could rebuild trust, but the road ahead will depend on transparency and consistent performance.
