On Thursday, Circle Internet Group’s stock price suffered a heavy blow, mainly due to the collective downgrading of its rating by Wall Street analysts and the escalation of a legal investigation involving cryptocurrency protocols. During trading on NASDAQ, the stock closed at $85.10, experiencing a daily decline of 9.9% and approaching the day’s lowest point.

This sharp one-day fluctuation was not an isolated incident; rather, it exacerbated the overall decline of the company since its initial public offering last year. In the past month, its stock price has fallen by nearly 24%, and in the past six months, the cumulative decline has reached approximately 43%. Although Circle’s stock price saw a significant increase between February and March, thanks to the substantial rise in the usage rate of its stablecoin, some investors seem to have taken this opportunity to profit and sell their shares, quickly shifting market sentiment towards caution.

The direct trigger for this wave of selling was the negative adjustments made by institutional rating agencies. On Thursday, Compass Point downgraded Circle’s investment rating from “neutral” to “sell” and set its target price at $77. This move indicated that the market believed Circle’s stock price still had approximately 9% room to fall.

At the same time, the ongoing uncertainty in the U.S. macro-regulatory environment posed another source of pressure. The legislative process aimed at reforming the market structure had come to a standstill, while banking groups continued to lobby against the issuance of stablecoin products with profit-making functions. Although Bernstein’s analyst team argued that these external concerns were being exaggerated and pointed out that Circle’s core business was stable, the usage rate of USDC was increasing, and its reserves were sufficient, the market was clearly more sensitive to potential policy risks.

Meanwhile, the recent smart contract vulnerability incident at the decentralized exchange Drift Protocol and the resulting legal investigation added further uncertainty to the entire crypto asset market, indirectly affecting Circle’s stock price. According to an official notice released this week, investors who suffered financial losses due to the Drift Protocol vulnerability are advised to contact Gibbs Mura Law Firm in Oakland, California, to explore potential compensation options.

This development strongly suggests that a class-action lawsuit regarding this incident is about to be filed or is currently in preparation. Although Circle was not directly involved in the planning or execution of this vulnerability attack, the frequent occurrence of such high-risk incidents has once again raised deep concerns about the stability of decentralized financial platforms and potential associated risks.

It is worth noting that the specific asset transfer paths involved in this attack have attracted particular attention in the industry. The hackers responsible for the attack quickly converted the stolen assets into USDC, leading the market to speculate whether Circle would use its freeze capabilities to intercept these illegal funds. However, so far, Circle has not taken any action to freeze these assets.