Blockchain investigator ZachXBT has launched a public campaign accusing stablecoin issuer Circle of significant compliance failures, alleging the company allowed over $240 million in USDC to reach North Korea-linked hackers, including the Lazarus Group, after multiple exploits. ZachXBT criticized Circle for delaying action despite having the technical capability to freeze the funds, arguing such delays violate USDC's own terms and conditions and enable illicit financial flows.
The controversy intensified following a separate, massive exploit of Solana's Drift Protocol on April 1, 2026, where an estimated $270–$285 million was drained. A substantial portion of these stolen assets was reportedly converted and routed through USDC via Circle's Cross-Chain Transfer Protocol (CCTP). Public backlash grew as critics highlighted that Circle, despite having freeze and blacklist mechanisms, did not act to stop the stolen funds.
After weeks of silence, Circle responded with an official blog post authored by Chief Strategy Officer Dante Disparte. Disparte defended the company's stance, stating that Circle's ability to freeze USDC is not discretionary and is only exercised when compelled by legal orders from authorities. "When Circle freezes USDC, it is not because the company has decided unilaterally to remove assets from a specific party. Rather, the law requires us to act," Disparte wrote. He linked the debate to broader regulatory efforts, stating Circle is working with policymakers to develop "safe harbor" frameworks for faster, legally sound responses to illicit activity.
ZachXBT swiftly countered this explanation, posting "The Circle USDC Files," which alleges more than $420 million in total compliance failures. He specifically claimed that in clear-cut cases involving illicit transfers, Circle had hours to act but chose not to, directly questioning the firm's compliance record. ZachXBT argued that Circle's blog post "contradicts itself" and attributed the issue to a leadership problem rather than purely legal constraints.
