Blockchain sleuth ZachXBT accuses Circle of slow USDC freezes across more than $420 million in ‘illicit funds’
ZachXBT cites over a dozen cases involving over $420 million, the most recent being the Drift Protocol exploit worth more than $280 million.
Renowned blockchain investigator ZachXBT has publicly criticized Circle for allegedly taking too long to freeze USDC tokens linked to illicit activities. The accusations encompass more than a dozen cases involving over $420 million in suspected criminal funds, with the most significant recent incident being the Drift Protocol exploit that resulted in losses exceeding $280 million.
ZachXBT's allegations highlight ongoing tensions between blockchain transparency advocates and stablecoin issuers regarding response times to criminal activities. Circle, the issuer of USDC, has the technical ability to freeze tokens on its platform when suspicious activity is detected. However, the blockchain sleuth suggests that delays in implementing these freezes allow bad actors more time to move or launder stolen funds across different platforms and protocols.
The accusations raise broader questions about the responsibilities of centralized stablecoin issuers in preventing crypto-related crimes. As USDC maintains its position as the second-largest stablecoin by market capitalization, Circle's freezing policies and response times could influence how regulators view the balance between decentralization principles and anti-money laundering compliance in the digital asset space.
Industry observers will likely monitor whether Circle responds to these specific allegations and whether the company adjusts its procedures for identifying and freezing suspicious USDC holdings. The debate also underscores the ongoing challenge of maintaining both user privacy and regulatory compliance in cryptocurrency markets.
Source: The Block
