Onchain investigator ZachXBT alleges that Circle, issuer of the USDC stablecoin, failed to freeze or blacklist roughly $420 million in illicit USDC flows across 15 public hack-and-fraud cases dating back to 2022. Circle has technical ability to freeze funds and blacklist addresses; ZachXBT says the firm either took minimal action or none in many of the incidents he reviewed, including cases linked to actors reportedly affiliated with the DPRK.
He cited several high-profile examples: an alleged failure to freeze about $9 million in USDC tied to the GMX DEX hack in July 2025; wallets connected to a roughly $200 million exploit of the Cetus DEX in May 2025 that were reportedly blacklisted only after attackers converted USDC into ETH; and a claimed lapse around the Drift Protocol hack, where Circle allegedly did not freeze $232 million in illicit flows despite a six-hour window during which attackers converted USDC to ETH in more than 100 transactions.
ZachXBT emphasized he was not trying to undermine Circle as a company, writing that the firm “builds good products” and noting he personally holds USDC. He argued, however, that the company’s inaction has had “real consequences for real people,” saying: “Nine figures were lost from the ecosystem because of repeated inaction across three years on law enforcement requests, private sector requests, and their own infrastructure. The $420 million-plus only accounts for major public cases. The real figure is likely significantly higher.”
Cointelegraph contacted Circle for comment but had not received a response at publication.
The claims have reignited discussion across crypto communities about the responsibilities of centralized service providers that control administrative tools for on-chain tokens. Critics ask whether issuers who can freeze or blacklist assets should act more aggressively to stem theft, while others point to legal, technical, and operational constraints that can complicate rapid intervention.
Circle has previously exercised freeze and blacklist powers: for example, it froze USDC tied to Tornado Cash addresses after the U.S. Office of Foreign Assets Control sanctioned those addresses in 2022. 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—an idea intended to provide another tool for responding to illicit activity on-chain.
The debate over how and when issuers should use control mechanisms for stablecoins is likely to continue as hacks and exploits remain common and as firms, regulators, and users weigh trade-offs between security, sovereignty, and censorship resistance.