Circle Failed To Freeze $420M in Illicit USDC Activity Since 2022

Onchain detective ZachXBT claims that Circle, the issuer of the USDC (USDC) stablecoin, has failed to freeze or blacklist about $420 million in illicit fund flows since 2022.

Circle can freeze illicit funds and blacklist wallet addresses, but either took “minimal” action to freeze illicit flows or failed to act in 15 separate hack-and-fraud cases, including those linked to North Korean (DPRK) state-affiliated hackers, ZachXBT said. 

The stablecoin issuer allegedly failed to freeze $9 million in USDC from the GMX decentralized exchange (DEX) hack in July 2025, and blacklisted wallets linked to the $200 million Cetus DEX hack in May 2025 after USDC was converted into Ether (ETH), according to ZackXBT.

Source: ZachXBT

Circle failed to freeze $232 million in illicit flows from the Drift Protocol Hack on Wednesday, despite a six-hour window in which the attackers converted USDC to ETH in over 100 separate transactions, he added. 

“Circle builds good products, and I hold USDC myself. This isn’t a post about hoping they collapse,” he said, adding that the failure to freeze these illicit flows has had “real consequences for real people.” He said:

Cointelegraph reached out to Circle but did not receive an immediate response by the time of publication.

Source: Lookonchain

The lack of asset freezes has sparked an online debate in the crypto community about the role and responsibilities of centralized service providers, as blockchain protocols and users continue to be targeted in hacks and cybersecurity exploits that drain funds. 

Related: ZachXBT claims Circle wrongfully freezing exchange wallets

Circle explores “reversible” USDC transactions

In September 2025, Heath Tarbert, the president of Circle, said that the company was exploring “reversible” USDC transactions that could be rolled back or amended in the event of hacks, theft and fraud.

Circle has frozen USDC funds and blacklisted wallets on multiple occasions, including freezing USDC held by Tornado Cash addresses sanctioned by the US Office of Foreign Assets Control in 2022. 

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