Tether uses $127.5 million recovery fund to displace USDC as Drift Protocol settlement asset

Impacted Drift Protocol users will receive transferable recovery tokens representing claims on a recovery pool to recoup losses over time. The pool is funded by a $127.5 million commitment from Tether and $20 million from partner ecosystem funds. This recovery follows an April 1 exploit in which North Korean-linked hackers compromised a multisignature wallet and stole $295.7 million in user funds, including $159 million in JLP, USDC, cbBTC, and SOL. The shift in asset preference is accelerated by Circle's failure to freeze the stolen funds. Circle now faces a class action suit accusing the firm of knowingly permitting attackers to offload $230 million in USDC via its blockchain bridge CCTP over several hours. As part of the relaunch, Drift Protocol is shifting its settlement asset from USDC to USDT. The move displaces USDC, which holds a market cap of $8.1 billion on Solana, 2.65 times larger than USDT's $3.05 billion. Tether claims the transition will bring 128,000 users and 35 ecosystem teams onto USDT-based trading.