On chain investigator ZachXBT has accused Circle of delaying action on freezing over $420 million in USDC linked to major crypto hacks since 2022.
Key Takeaways
- ZachXBT claims Circle delayed freezing over $420 million in USDC across 15 major crypto incidents.
- Recent Drift Protocol exploit involved over $280 million, with no immediate freeze despite hours of activity.
- Circle says it acts only under legal requirements, citing compliance and user protection policies.
- Report suggests broader compliance concerns, with actual affected funds potentially higher.
What Happened?
ZachXBT released a detailed report titled Circle Files, highlighting multiple cases where Circle allegedly failed to promptly freeze stolen USDC. The report covers incidents since 2022 and raises concerns about the company’s compliance practices.
The allegations gained traction following the Drift Protocol exploit, where significant funds were moved over several hours without intervention.
1/ Welcome to the Circle $USDC files.
— ZachXBT (@zachxbt) April 3, 2026
$420M+ in alleged compliance failures since 2022, including fifteen cases of the US-regulated stablecoin issuer taking minimal action against illicit funds. pic.twitter.com/OiWZz5MrVM
ZachXBT Details Alleged Compliance Gaps
In a thread shared on X, ZachXBT outlined 15 major incidents involving more than $420 million in illicit USDC flows. The investigator described these cases as part of a broader pattern of delayed response by Circle.
The report claims that Circle had both the technical capability and contractual authority to freeze funds but failed to act in a timely manner.
- The stablecoin issuer’s terms allow it to block or blacklist addresses linked to illegal activity.
- Its token infrastructure includes a freeze and blacklist function.
- As a U.S. regulated entity, Circle is expected to respond to law enforcement and compliance requests.
Despite these factors, ZachXBT stated that the company has not lived up to its “robust compliance program” expectations.
Drift Exploit Raises Fresh Concerns
The Drift Protocol hack, valued at over $280 million, is the most recent case cited in the report. According to ZachXBT:
The incident also drew attention from blockchain analytics firm Elliptic, which identified indicators suggesting possible links to the Democratic People’s Republic of Korea.
Other Hacks Highlight Delayed Response
Beyond Drift, the report references several high profile incidents, including:
- SwapNet exploit worth $16 million in January 2026.
- Cetus Protocol breach involving $223 million, where freezing reportedly occurred a month later.
- Bybit hack, where Circle allegedly took 24 hours longer than Tether to freeze 338,000 USDC.
- Additional cases involving Nomad Bridge, Mango Markets, and GMX.
In the Cetus case, ZachXBT claimed that requests from project teams and experts were made, but Circle only acted after the stolen funds had already been converted.
Circle Responds to Allegations
Circle defended its approach, emphasizing its regulatory obligations and legal framework.
The company added that incidents like the Drift exploit highlight the need for stronger coordination across the digital asset ecosystem.
Circle has long positioned USDC as a trusted and regulated alternative to other stablecoins such as Tether’s USDT, often advocating for clearer U.S. regulations to support adoption.
Concerns Over Industry Standards
ZachXBT compared Circle’s response times with competitors like Tether and Paxos, claiming they acted more quickly in similar situations.
He clarified that his criticism is not aimed at undermining Circle as a company:
He also warned that the $420 million figure only reflects publicly known cases, suggesting the real impact could be significantly higher.
CoinLaw’s Takeaway
From my perspective, this situation highlights a deeper issue in crypto that goes beyond just one company. Speed matters in hacks, and even a few hours can determine whether funds are recovered or lost forever.
I found that while Circle’s focus on legal compliance is understandable, users expect faster action in obvious exploit scenarios. In my experience, trust in stablecoins is not only about regulation but also about how quickly issuers respond during crises.
If these claims hold true, Circle may need to rethink its balance between legal caution and real time risk response, especially as the industry moves toward mainstream adoption.
