Circle Faces Scrutiny Over Handling of Stolen USDC Funds

A recent investigation by blockchain expert ZachXBT has shed light on Circle's handling of USDC, highlighting a series of compliance failures that have led to significant losses for users.

The investigation, which examined multiple high-profile hacks and thefts, found that Circle failed to freeze stolen funds in several instances. This included the Drift Protocol hack, where over $232 million was bridged from Solana to Ethereum using Circle's own Cross-Chain Transfer Protocol, with no action taken by Circle.

The investigation also highlighted a delay of 24 hours between law enforcement asking Circle to freeze funds and actually doing so in the Bybit hack. Similarly, in the Radiant Capital hack, funds stayed in hacker wallets for hours before being frozen, and in the Mango Markets hack, stolen funds were never frozen on-chain.

Circle has the tools to act faster, but according to ZachXBT, the company repeatedly chose not to do so. The delay had significant consequences, with losses reaching nine figures. Circle's own terms of service explicitly state that it reserves the right to restrict access for suspected illicit actors 'in its sole discretion,' which means it can freeze stolen USDC without waiting for court orders.