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Circle faces criticism for freezing legitimate wallets while missing $420M in illicit USDC flows since 2022

Market News
04 Apr 2026
Bitcoin
View Source
Bearish
pluang ai news

Onchain investigator ZachXBT accused Circle, issuer of USDC stablecoin, of failing to freeze over $420 million in illicit USDC flows across 15 cases since 2022, including major hacks linked to North Korea's Lazarus Group. Despite having the technical ability and legal authority, Circle delayed or denied freezing stolen funds during incidents like the Drift Protocol exploit and Swapnet hack. Conversely, Circle froze 16 legitimate business wallets in a March 2026 civil case, including the DFINITY Foundation's ckETH Minter contract, drawing criticism for poor compliance decisions. Circle states it only freezes assets when legally required, prioritizing formal legal processes over preemptive action. The controversy raises questions about balancing legal caution with preventing crypto ecosystem losses from illicit activity.

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