TL;DR

  • ZachXBT claims Circle failed to freeze over $420 million in USDC linked to hacks and exploits since August 2022
  • The latest example is the Drift Protocol exploit from April 1, 2026, where an estimated hundreds of millions of dollars in stolen funds were moved via Circle's own CCTP protocol without intervention
  • In March 2026, Circle froze 16 operational business accounts with seemingly limited justification – some have since been unfrozen
  • Circle refers to legal obligations and court orders but has not publicly commented on the specific allegations of slow handling of stolen funds

Circle Under Fire: Quick Against Legitimate Actors, Slow Against Criminals?

Blockchain investigator ZachXBT has published what he calls a «Circle Inaction Archive» – a collection of over a dozen instances where he believes stablecoin issuer Circle failed to freeze USDC in time during serious security incidents. According to The Block, the total amounts involved exceed $420 million since August 2022.

According to ZachXBT, Circle was "asleep" while stolen funds were transferred in open transactions during US business hours
ZachXBT Accuses Circle: Slept During $280M Hack While Legitimate Accounts Were Frozen

Drift Protocol Exploit Highlights the Issue

On April 1, 2026, Drift Protocol was subjected to what is described as an exploit worth over $280 million. ZachXBT claims that tens of millions of dollars in stolen USDC were bridged from Solana to Ethereum via Circle's Cross-Chain Transfer Protocol (CCTP) over several hours – without Circle intervening. According to the investigator's claims, this occurred during regular US business hours, which he believes makes the lack of reaction particularly difficult to explain.

Other cases ZachXBT highlights include the SwapNet loss of $16 million in January 2026, the Cetus Protocol exploit of $223 million in 2025, as well as incidents related to Mango Markets and Nomad Bridge. He suggests that competitors like Tether and Paxos have reacted faster in similar situations.

ZachXBT Accuses Circle: Slept During $280M Hack While Legitimate Accounts Were Frozen

Erroneous Freezing of Legitimate Accounts Creates Contrast

The paradox ZachXBT points to is amplified by an incident from March 2026: Circle froze the USDC balances of 16 active crypto businesses – including exchanges, online casinos, and currency platforms. Investigator ZachXBT characterized the decision as the «potentially most incompetent» he had seen in over five years in the industry, claiming that a simple review of on-chain activity would have made it obvious that these were operational accounts unrelated to criminal activity.

Circle justified the freezes by citing compliance with an ongoing and sealed civil lawsuit in the US (case number 26-cv-2327 in New York), and CEO Jeremy Allaire emphasized the company's commitment to regulatory compliance. The company could not publicly disclose details of the case.

Following persistent criticism, at least five of the 16 accounts were unfrozen, including an account linked to Goated.com with approximately 130,966 USDC. The Blockchain Association and other industry organizations have urged Circle for greater transparency regarding its decision-making process.

Circle's USDC contracts grant the company the right to freeze funds «at its sole discretion» – but the question is whether that discretion is applied consistently

Circle Defends Itself with Legal Framework

Circle's official terms allow the company to block addresses and freeze USDC if it believes the funds may be linked to illegal activity – or if a valid legal order requires it. CEO Allaire has previously stated that the company primarily acts upon requests from law enforcement authorities, rather than solely based on proactive on-chain analysis.

To date, Circle has not publicly commented on the specific allegations of lack of or delayed intervention during the Drift Protocol exploit or the other security incidents ZachXBT refers to.

Centralized Governance Under Pressure

The case highlights a fundamental tension in centralized stablecoins: the more power an issuer has to freeze funds, the higher the expectations that this power will be used quickly, consistently, and transparently. When a company like Circle freezes the funds of legitimate actors without clear communication, while stolen funds seemingly pass unhindered, trust in the centralized model is undermined – regardless of legal explanations.

ZachXBT's indictment has not been independently verified, and Circle has yet to present its full version of events. The crypto community is closely following the case.