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Crypto Score 55 Bearish

ZachXBT Alleges Circle Fails to Freeze $420M in Illicit USDC Flows Since 2022

Apr 03, 2026 17:12 UTC
CSCO, USDC-USD, ^VIX
Short term

Onchain investigator ZachXBT claims Circle, the issuer of USDC, has failed to act on $420 million in illicit fund flows since 2022, despite having the capability to freeze transactions. The allegations span 15 cases, including hacks linked to North Korean state-affiliated actors.

  • ZachXBT claims Circle failed to freeze $420 million in illicit USDC flows since 2022.
  • Allegations include 15 cases of inaction, including hacks linked to North Korean state-affiliated hackers.
  • Circle allegedly failed to freeze $9 million in USDC from the GMX DEX hack in July 2025.
  • The company reportedly blacklisted wallets after USDC was converted to ETH in the $200 million Cetus DEX hack in May 2025.
  • Circle allegedly failed to freeze $232 million in illicit flows from the Drift Protocol Hack despite a six-hour window to act.
  • The accusations have sparked debate about the responsibilities of centralized crypto service providers.

Onchain detective ZachXBT has accused Circle, the company behind the USDC stablecoin, of failing to freeze or blacklist approximately $420 million in illicit fund flows since 2022. The allegations, detailed in a recent analysis, highlight 15 separate instances where Circle allegedly took minimal or no action to prevent the movement of stolen USDC, including cases involving North Korean state-affiliated hackers. In one case, Circle reportedly failed to freeze $9 million in USDC following the GMX decentralized exchange (DEX) hack in July 2025. Additionally, the company allegedly blacklisted wallets linked to the $200 million Cetus DEX hack in May 2025 only after the stolen USDC had been converted into Ether (ETH). Another significant incident cited by ZachXBT is the Drift Protocol Hack, where Circle allegedly failed to freeze $232 million in illicit flows despite having a six-hour window to act as attackers converted USDC to ETH in over 100 transactions. ZachXBT emphasized that the failure to freeze these funds has real-world consequences for victims of crypto-related fraud and theft. He noted that while he holds USDC himself and acknowledges the company’s product quality, the compliance failures raise concerns about the responsibilities of centralized entities in the crypto ecosystem. Circle has not yet responded to requests for comment. The allegations have reignited debates within the crypto community about the role of centralized service providers in preventing illicit activity, especially as blockchain protocols and users remain frequent targets of hacks and cybersecurity exploits.

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