Circle faced fresh scrutiny after onchain investigator ZachXBT alleged that the USDC issuer failed to freeze or blacklist about $420 million in illicit fund flows since 2022.
Summary
- ZachXBT said Circle failed to freeze illicit USDC across 15 hack and fraud cases since 2022.
- The claims included GMX, Cetus, and Drift, where Circle allegedly had time to block funds.
- The accusations renewed debate over stablecoin issuers, compliance duties, and delayed responses to onchain crime.
The claims centered on 15 hack and fraud cases in which Circle allegedly had time to act but did not move fast enough, according to ZachXBT’s public thread and follow-up reporting.
ZachXBT said Circle took “minimal” action or failed to act in 15 separate cases tied to stolen or illicit USDC flows. He argued that the delays stretched across three years and involved law enforcement requests, private sector requests, and cases that were visible onchain.
He pointed to several examples. ZachXBT said Circle did not freeze about $9 million in USDC linked to the GMX hack in July 2025. He also said Circle blacklisted wallets tied to the Cetus hack only after the stolen USDC had already been converted into Ether.
In a recent Drift Protocol case, he said attackers moved about $232 million during a six-hour window through more than 100 transactions before the funds were converted. Cointelegraph said Circle did not provide an immediate response before publication.
The allegations renewed debate over how much responsibility a centralized stablecoin issuer should carry during hacks and fraud cases. Circle has the technical ability to freeze USDC and blacklist wallet addresses, which made the timing of any response a central issue in the discussion around ZachXBT’s claims.
ZachXBT tried to separate the criticism from a broader attack on Circle. He wrote,
He added that “nine figures were lost from the ecosystem because of repeated inaction” and said the $420 million figure covered only major public cases.
Circle’s past actions stay in focus
The renewed criticism also drew attention to Circle’s earlier comments on transaction controls. In September 2025, Circle President Heath Tarbert said the company was exploring “reversible” USDC transactions that could be rolled back or amended in cases of hacks, theft, or fraud. That idea suggested Circle was already studying stronger user protections for some payment flows.
Circle has acted in other enforcement cases before. In August 2022, the US Treasury’s Office of Foreign Assets Control sanctioned Tornado Cash, saying the mixer had been used to launder more than $7 billion in virtual currency since 2019. After those sanctions, Circle froze USDC tied to sanctioned Tornado Cash addresses, showing that the company has used blacklist controls when compliance action required it.
Source: https://crypto.news/zachxbt-claims-circle-failed-to-halt-420m-in-usdc/
