Circle confronted recent scrutiny after onchain investigator ZachXBT alleged that the USDC issuer didn’t freeze or blacklist about $420 million in illicit fund flows since 2022.
Abstract
- ZachXBT mentioned Circle didn’t freeze illicit USDC throughout 15 hack and fraud circumstances since 2022.
- The claims included GMX, Cetus, and Drift, the place Circle allegedly had time to dam funds.
- The accusations renewed debate over stablecoin issuers, compliance duties, and delayed responses to onchain crime.
The claims centered on 15 hack and fraud circumstances during which Circle allegedly had time to behave however didn’t transfer quick sufficient, in line with ZachXBT’s public thread and follow-up reporting.
ZachXBT mentioned Circle took “minimal” motion or didn’t act in 15 separate circumstances tied to stolen or illicit USDC flows. He argued that the delays stretched throughout three years and concerned legislation enforcement requests, personal sector requests, and circumstances that have been seen onchain.
He pointed to a number of examples. ZachXBT mentioned Circle didn’t freeze about $9 million in USDC linked to the GMX hack in July 2025. He additionally mentioned Circle blacklisted wallets tied to the Cetus hack solely after the stolen USDC had already been transformed into Ether.
In a current Drift Protocol case, he mentioned attackers moved about $232 million throughout a six-hour window by greater than 100 transactions earlier than the funds have been transformed. Cointelegraph mentioned Circle didn’t present a right away response earlier than publication.
The allegations renewed debate over how a lot accountability a centralized stablecoin issuer ought to carry throughout hacks and fraud circumstances. Circle has the technical potential to freeze USDC and blacklist pockets addresses, which made the timing of any response a central subject within the dialogue round ZachXBT’s claims.
ZachXBT tried to separate the criticism from a broader assault on Circle. He wrote,
“Circle builds good merchandise, and I maintain USDC myself. This isn’t a publish about hoping they collapse.”
He added that “9 figures have been misplaced from the ecosystem due to repeated inaction” and mentioned the $420 million determine lined solely main public circumstances.
Circle’s previous actions keep in focus
The renewed criticism additionally drew consideration to Circle’s earlier feedback on transaction controls. In September 2025, Circle President Heath Tarbert mentioned the corporate was exploring “reversible” USDC transactions that may very well be rolled again or amended in circumstances of hacks, theft, or fraud. That concept recommended Circle was already learning stronger consumer protections for some fee flows.
Circle has acted in different enforcement circumstances earlier than. In August 2022, the US Treasury’s Workplace of Overseas Property Management sanctioned Twister Money, saying the mixer had been used to launder greater than $7 billion in digital foreign money since 2019. After these sanctions, Circle froze USDC tied to sanctioned Twister Money addresses, displaying that the corporate has used blacklist controls when compliance motion required it.
