On-chain investigator ZachXBT has published a detailed investigation alleging delays or failures in the USDC stablecoin issuer circuit to freeze over $420 million worth of theft proceeds since 2022.
Dubbed “Circle $USDC files,” the X index highlights 15 cases in which the company took little action regarding illicit funds.
USDC Source Circuit missed regulatory satisfaction by $420 million
Among the most recent cases highlighted: a $285 million Drift Protocol exploit, which has since caused an attack. Domino effect Over 20 other Solana-based projects. ZachXBT observed a 6-hour delay in the Circle action, during which the hacker laundered multiple batches of USDC.
In the same year, $3 million (in US dollars) of the $16 million stolen from SwapNet remained at the hacker’s address for two days. Law enforcement and private parties requested a temporary freeze, which Circle did not honor.
In another major case, a North Korean cybercrime gang known as the Lazarus Group stole $1.5 billion in February 2025. Bybit hack. While Tether froze the linked addresses within hours, Circle allegedly waited an additional 24 hours before acting.
Other reports detail thefts ranging from $200,000 to $223 million. Issuers delayed freezing by up to 4 months, while some did not freeze addresses linked to bad actors at all.
source: X
One user pointed out the irony of Circle’s inaction, saying that banning these titles would have served their interests.
Regulatory violations in the crypto industry
Circle is the latest high-profile cryptocurrency player to allegedly challenge regulatory mandates related to illicit money flows. Others Binance Even Trump-linked World Liberty Financial, both of whom are accused of Iran-related flows.
This news raises questions about Circle’s credibility, especially considering that USDC is the second largest stablecoin globally. The company also reported building a compliance engine in 2024, but its use appears to have declined.
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