ZachXBT claims Circle failed to halt $420M in USDC

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ZachXBT claims Circle failed to halt $420M in USDC

cryptonews04-04 15:19

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 ...

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He argued that the delays stretched across three years and involved law enforcement requests, private sector requests, and cases that were visible onchain.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. 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He argued that the delays stretched across three years and involved law enforcement requests, private sector requests, and cases that were visible onchain.\nHe 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. \nIn 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.\nDebate grows over Circle’s response\nThe 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.\nZachXBT tried to separate the criticism from a broader attack on Circle. He wrote, \n\n“Circle builds good products, and I hold USDC myself. This isn’t a post about hoping they collapse.” \n\nHe added that “nine figures were lost from the ecosystem because of repeated inaction” and said the $420 million figure covered only major public cases.\nCircle’s past actions stay in focus\nThe 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.\nCircle 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.\n\n\n\n\n\n                Read more:\n            \n\n                Will Ethereum price clear $2,163 resistance or confirm a double top as the 4H MACD turns bullish?","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"policyRegulatory","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"isCrawlerRequest":true}