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Should Circle Have Frozen the Drift Exploit Funds?

Olivia Capozzalo & Christopher Storaker
April 17, 2026

Happy Friday, Defiers!

Today’s big story:

  • Circle had the choice to freeze $230M of USDC hacked from the Drift protocol, but it didn’t. In our inaugural issue of Converge, we highlight an additional wrinkle in that controversy.

In other news:

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Circle's Impossible 230M USDC Choice

This is an extract from the full piece published earlier today on Converge, our weekly briefing onthe intersection of DeFi and TradFi.

North Korean hackers drained $285 million from Drift Protocol on April 1, roughly $232 million in stolen USDC moved through Circle's own Cross-Chain Transfer Protocol over six hours — during U.S. business hours, across more than 100 transactions. Circle did not freeze the funds. A class action followed.

[...]

The debate has centered on Circle's freeze authority, a power the issuer exercises over USDC addresses after the fact. But the Drift case exposes a different and arguably more consequential gap: the absence of compliance frameworks governing Circle's very active and centralized role in cross-chain settlement.

Every CCTP transfer involves a sequence of discrete steps: a burn on the source chain, an observation and verification by Circle's Attestation Service, the issuance of a cryptographic attestation, and a mint on the destination chain. Arguably, the mint step is itself an act of issuance: Circle is creating new USDC for the receiving party.

When that party is a known attacker moving stolen funds, the question is whether the issuer's compliance obligations should apply at that point of issuance.

The GENIUS Act, enacted July 2025, treats stablecoin issuers as BSA financial institutions. A FinCEN/OFAC joint proposed rule published April 10 — nine days after the exploit — mandates AML and sanctions programs for issuers. Europe's MiCA framework imposes its own requirements on stablecoin issuers within the EU. But none of these frameworks addresses the active steps an issuer performs when operating a cross-chain bridge, or whether those steps carry their own screening obligations distinct from the issuer's general freeze authority.

[...]

Don’t miss the next issue and subscribe to Converge (fka Real World), where we track how trillions are coming onchain. Each week you’ll get the highest-signal RWA, tokenization and stablecoin news, and in depth-analysis to put it all in context.

Subscribe to Converge

Quantum Could Break Bitcoin Sooner Than We Thought | Alex Pruden

In this episode of The Defiant Podcast, Camila Russo sits down with Alex Pruden, co-founder and CEO of Project 11, to unpack what the latest quantum breakthroughs actually mean for Bitcoin, Ethereum, and the broader crypto ecosystem.

Alex explains why the latest research matter, how quantum computers could use Shor’s algorithm to break the cryptography behind blockchain ownership, why exposed public keys are especially vulnerable, and what “Q-Day” could look like if the industry is unprepared.

Kraken's Parent Firm to Acquire US Derivatives Exchange Bitnomial

Payward, the parent company of U.S. centralized exchange Kraken, announced today, April 17, that it has entered into an agreement to acquire Bitnomial, a Commodity Futures Trading Commission (CFTC)-regulated crypto derivatives exchange.

Why it matters: Per Kraken, Bitnomial is the first crypto firm to receive the full set of CFTC licenses, as a regulated exchange, clearinghouse, and brokerage.

Memecoin Sector Shows Signs of Life as ASTEROID Rockets Past $25M

The memecoin trenches are showing signs of renewed life this week. ASTEROID, an Ethereum-based memecoin named after the toy that flew on SpaceX's Polaris Dawn mission in September 2024, surged more than 70,000% in 24 hours to a $28 million market cap on Friday.

Why it matters: On Solana, memecoin UNC surged above $21 million on Thursday with $15.3 million in trading volume, the highest on the chain that day.

Mitsui & Co.'s Crypto Arm Brings Tokenized Metals Asset Zipangcoin to OP Mainnet

Mitsui & Co. Digital Commodities (MDC), a subsidiary of Japanese trading giant Mitsui & Co., Ltd., is launching its tokenized gold, silver, and platinum asset, Zipangcoin (ZPG), on Optimism’s Ethereum Layer 2, OP Mainnet.

Why it matters: The OP Mainnet deployment marks the first time the ZPG token will be issued on a public blockchain, kicking off its global rollout.

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