Allegations Against Circle Regarding USDC Transactions
Circle, the issuer of the USDC stablecoin, has come under intense scrutiny following serious allegations from onchain investigator ZachXBT. His recent statements asserted that since 2022, Circle has inadequately addressed approximately $420 million in illicit fund transactions. The focus of these allegations stems from 15 distinct cases of hacking and fraud where Circle, according to ZachXBT, had the opportunity to intervene but did not act promptly.
Details of the Investigation
ZachXBT’s investigation details how Circle reportedly took only minimal or no action in response to these incidents, which spanned over a three-year period. These involved requests for action from law enforcement, private sector entities, and scenarios visible on the blockchain. Specific examples highlighted by ZachXBT include a significant incident involving the GMX hack from July 2025, where Circle allegedly failed to freeze nearly $9 million in stolen USDC. Moreover, he indicated that during the Cetus hack, wallets associated with the theft were not blacklisted until after the criminal funds had been converted into Ether, suggesting a critical delay in Circle’s response.
In a particularly concerning case tied to Drift Protocol, attackers executed over 100 transactions within just six hours, moving approximately $232 million before any preventive measures were taken by Circle.
Circle’s Response and Accountability
Amidst these glowing concerns, Circle has not issued an immediate public response to the allegations. This situation has reignited discussions regarding the accountability of centralized stablecoin providers in incidents of fraud and hacking. Notably, Circle possesses the capability to freeze USDC tokens and blacklist wallets, which puts the timing of their actions under significant scrutiny according to ZachXBT’s claims.
Clarifications from ZachXBT
Despite the critical tone of the allegations, ZachXBT clarified that his intentions were not to undermine Circle’s contributions to the cryptocurrency ecosystem, expressing his own investment in USDC and noting that his remarks were not aimed at wishing the company to fail. He emphasized the substantial losses incurred—referred to as “nine figures”—due to what he characterized as repeated inaction in these cases, which represent only a portion of the broader issues at hand.
Future Safeguards and Historical Actions
These accusations also raised discussions about Circle’s previously mentioned transaction control tools. In September 2025, Circle’s President Heath Tarbert indicated that the company was investigating “reversible” transactions for USDC that could be corrected in instances of hacks or fraud, signaling a potential shift towards improved user safeguards.
Circle has previously taken action when required; for instance, in August 2022, following sanctions from the US Treasury’s Office of Foreign Assets Control against Tornado Cash—accused of laundering upwards of $7 billion—Circle acted decisively to freeze USDC linked to sanctioned addresses. This history suggests that while the company does utilize its compliance mechanisms, the current demands on their response protocols remain in question.
