ZachXBT

USDC

Tornado Cash

Onchain detective ZachXBT claims that Circle, the issuer of the USDC (<a href="https://cointelegraph.com/price-indexes/usdc" rel="noopener noreferrer nofollow">USDC</a>) stablecoin, has failed to freeze or blacklist about $420 million in illicit fund flows since 2022.
Circle can <a href="https://cointelegraph.com/news/circle-tether-freezes-over-65m-in-assets-transferred-from-multichain" rel="noopener noreferrer nofollow">freeze illicit funds</a> 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 <a href="https://x.com/zachxbt/status/2040055757211885953" rel="noopener noreferrer nofollow">said</a>.&nbsp;
The stablecoin issuer allegedly failed to freeze $9 million in USDC from the <a href="https://cointelegraph.com/news/gmx-exploiter-begins-returning-stolen-funds" rel="noopener noreferrer nofollow">GMX decentralized exchange (DEX) hack</a> in July 2025, and blacklisted wallets linked to the <a href="https://cointelegraph.com/news/cetus-dex-sui-exploit-200m-loss" rel="noopener noreferrer nofollow">$200 million Cetus DEX hack</a> in May 2025 after USDC was converted into Ether (<a href="https://cointelegraph.com/price-indexes/ethereum" rel="noopener noreferrer nofollow">ETH</a>), according to ZackXBT.
<figure><img alt="Circle, Cybercrime, Hacks, Stablecoin" src="https://s3.cointelegraph.com/uploads/2026-04/019d5442-fc44-70d1-bc23-949df20ab329.png">
 <figcaption>Source: <a href="https://x.com/zachxbt/status/2040055757211885953" rel="noopener noreferrer nofollow">ZachXBT</a>
 </figcaption>
</figure>
<a href="https://cointelegraph.com/news/drift-280-million-hack-questions-circle-response" rel="noopener noreferrer nofollow">Circle failed to freeze $232 million</a> in illicit flows from the <a href="https://cointelegraph.com/news/drift-protocol-pause-deposit-unusual-activity" rel="noopener noreferrer nofollow">Drift Protocol Hack</a> on Wednesday, despite a six-hour window in which the attackers converted USDC to ETH in over 100 separate transactions, he added.&nbsp;
“Circle builds good products, and I hold USDC myself. This isn't a post about hoping they collapse,” he <a href="https://x.com/zachxbt/status/2040056067640709563" rel="noopener noreferrer nofollow">said</a>, adding that the failure to freeze these illicit flows has had “real consequences for real people.” He said: 
<blockquote>
 “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.”
</blockquote>
Cointelegraph reached out to Circle but did not receive an immediate response by the time of publication.
<figure><img alt="Circle, Cybercrime, Hacks, Stablecoin" src="https://s3.cointelegraph.com/uploads/2026-04/019d5445-ecca-78af-80f3-20224a590e62.png">
 <figcaption>Source: <a href="https://x.com/lookonchain/status/2039399827809996904" rel="noopener noreferrer nofollow">Lookonchain</a>
 </figcaption>
</figure>
The lack of asset freezes has sparked an online <a href="https://x.com/austincampbell/status/2039446886038253943" rel="noopener noreferrer nofollow">debate</a> in the crypto community about the role and responsibilities of centralized service providers, as blockchain protocols and users continue to be targeted in <a href="https://cointelegraph.com/news/defi-hacks-169m-q1-2026-crypto-exploits-decline" rel="noopener noreferrer nofollow">hacks and cybersecurity exploits</a> that drain funds.&nbsp;
Related: <a href="https://cointelegraph.com/news/zachxbt-claims-circle-wrongfully-freezing-exchange-wallets" rel="noopener noreferrer nofollow">ZachXBT claims Circle wrongfully freezing exchange wallets</a>
<h2 id="circle-explores-reversible-usdc-transactions">Circle explores “reversible” USDC transactions</h2>
In September 2025, Heath Tarbert, the president of Circle, said that the company was <a href="https://cointelegraph.com/news/circle-examines-reversible-stablecoin-transactions" rel="noopener noreferrer nofollow">exploring “reversible” USDC transactions</a> 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 <a href="https://cointelegraph.com/news/circle-freezes-blacklisted-tornado-cash-smart-contract-addresses" rel="noopener noreferrer nofollow">freezing USDC held by Tornado Cash addresses</a> sanctioned by the US Office of Foreign Assets Control in 2022.&nbsp;
Magazine: <a href="https://cointelegraph-magazine.com/meet-crypto-sleuths-fighting-crime-better-than-the-cops/" rel="noopener noreferrer nofollow">Meet the onchain crypto detectives fighting crime better than the cops</a>

ZachXBT accuses Circle of $420M in 'compliance failures' since 2022

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