ZachXBT Criticizes Circle Over Delayed USDC Freezes Linked to $420M Illicit Funds

Blockchain investigator ZachXBT has accused Circle of slow responses in freezing funds linked to illegal activity, citing 15 incidents involving more than $420 million in alleged illicit transactions.

In a detailed thread, ZachXBT pointed to the recent Drift Protocol exploit, valued at over $280 million, as a key example. According to the report, attackers bridged approximately 232 million USDC from the Solana network to Ethereum through more than 100 transactions over six hours, yet no funds were frozen during that period.

Blockchain analytics firm Elliptic stated that multiple indicators suggested links to the Democratic People’s Republic of Korea in connection with the attack.

Earlier Incidents Raise Compliance Questions

ZachXBT also referenced the Cetus Protocol exploit, valued at $223 million, where roughly 61 million USDC was bridged from the Sui network to Ethereum. In that case, the address was reportedly blacklisted one month later, after funds had already been converted to Ether.

Circle responded that it freezes assets only when legally required and in line with privacy protections. With USDC circulation exceeding $77 billion, the criticism adds pressure on stablecoin issuers to improve coordination and response times across the digital asset ecosystem.

Disclaimer

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