Circle Criticized for Slow Response to Illicit USDC Activities

Circle, the issuer of the popular stablecoin USDC, has come under scrutiny for its handling of illicit activities involving the asset. According to on-chain detective ZachXBT, Circle's slow response to illegal transactions has resulted in significant financial losses for victims.

The researcher has compiled a list of 15 cases since 2022 where Circle failed to promptly freeze assets linked to suspicious or illegal transactions. This includes a recent hack of DeFi project Drift Protocol, where attackers used the CCTP protocol to transfer over $232 million from Solana to Ethereum without any USDC being frozen.

ZachXBT's list also highlights multiple instances where Circle ignored requests from on-chain researchers to freeze assets. For example, in August 2022, Circle had 30-45 minutes to freeze $45 million withdrawn from Nomad Bridge but failed to do so. Similarly, in January 2026, perpetrators moved $13 million stolen from SwapNet over several hours, with Circle ignoring requests for asset freezing.

The researcher emphasizes that while Circle builds good products and holds USDC itself, its compliance decisions have had serious consequences for real people. ZachXBT's criticism is not aimed at hoping Circle fails but rather at highlighting the need for improved responsiveness in addressing illicit activities involving USDC.