ZachXBT has accused Circle of failing to freeze over $420 million in illicit USDC transactions, criticizing the slow response to numerous illegal activities.
Blockchain investigator ZachXBT has publicly criticized Circle for its delayed response to alleged illegal transactions involving the USDC stablecoin, highlighting compliance failures totaling over $420 million since 2022.
In a recent post, ZachXBT noted that despite having the means to freeze assets at the smart contract level, Circle has repeatedly failed to act quickly against suspicious activities. He documented 15 separate instances where illicit funds were not addressed promptly, including the notorious Drift Protocol hack, which saw $280 million stolen.
"The attacker utilized the CCTP protocol to transfer around 232 million USDC from Solana to Ethereum, completing over 100 transactions within six hours," ZachXBT stated in his analysis.
During this incident, the hacker managed to launder funds without Circle taking any action to freeze the USDC involved. Expert analysis from companies like Diverg, TRM Labs, and Elliptic linked the hack to the North Korean cyber group Lazarus.
ZachXBT's investigation reveals multiple cases of Circle's inaction. Notably, in August 2022, Circle had the opportunity to freeze $45 million withdrawn from Nomad Bridge but failed to act within a critical 30-45 minute window. Another instance in January 2026 involved criminals moving $13 million stolen from SwapNet, during which Circle also ignored urgent requests for intervention.
“On May 22, 2025, Cetus protocol was hacked for $223 million, and despite requests to freeze the assets, Circle acted only after funds had already been converted to ETH," ZachXBT elaborated.
Despite praising Circle's product offerings and acknowledging his own holdings of USDC, ZachXBT stressed that the company’s choices regarding compliance have led to severe implications for those affected by these failures. This criticism follows a prior incident in March, where Circle mistakenly froze 16 wallets related to a U.S. civil lawsuit.
