Onchain investigator ZachXBT has publicly accused Circle, the issuer of the USDC stablecoin, of failing to freeze or blacklist approximately $420 million in illicit fund flows since 2022. According to ZachXBT, Circle either took minimal action or did not act at all across 15 separate hack and fraud incidents, including cases tied to North Korean (DPRK) state-affiliated hackers. The allegations have drawn significant attention within the cryptocurrency community.
Among the specific cases cited, ZachXBT claims Circle failed to freeze $9 million in USDC connected to a hack of the GMX decentralized exchange in July 2025. He also alleges that Circle only blacklisted wallets linked to the $200 million Cetus DEX hack in May 2025 after the stolen USDC had already been converted into Ether. In both instances, the delayed or absent response allegedly allowed bad actors to move funds beyond reach.
The most recent case highlighted involves the Drift Protocol hack, in which ZachXBT says Circle failed to freeze $232 million in illicit USDC despite having a six-hour window to act. During that period, the attackers reportedly converted the USDC into Ether through more than 100 separate transactions. ZachXBT argues this window represented a clear opportunity for intervention that went unused.
Despite his criticism, ZachXBT was careful to clarify his intentions. He stated that Circle builds good products and that he personally holds USDC, emphasizing that his post was not intended to advocate for the company’s collapse. He did, however, stress that the failure to act on illicit flows has had real consequences for real people affected by these exploits. Cointelegraph reached out to Circle for comment but had not received a response by the time of publication.
The accusations have ignited a broader debate within the crypto community about the responsibilities of centralized stablecoin issuers when blockchain protocols and users are targeted by hackers. Critics question whether companies like Circle are doing enough to use their technical capabilities — such as wallet blacklisting and fund freezing — to protect users. Supporters of Circle, meanwhile, point to the company’s past actions as evidence of its willingness to intervene when appropriate.
Circle has previously demonstrated its ability and willingness to freeze funds in certain circumstances. In 2022, the company froze USDC held in Tornado Cash wallet addresses that had been sanctioned by the US Office of Foreign Assets Control. That action showed the company possesses the tools necessary to act swiftly, making the alleged inaction in the more recent cases a point of contention for critics.
Looking ahead, Circle’s president, Heath Tarbert, indicated in September 2025 that the company was exploring the possibility of implementing reversible USDC transactions. Such a mechanism could allow transactions to be rolled back or amended in cases involving theft, fraud, or hacks. Whether that initiative will address the concerns raised by ZachXBT remains to be seen, as the debate over centralized issuers’ obligations in a decentralized ecosystem continues.
Originally reported by CoinTelegraph.
