Allegations Against Circle

Circle, the company behind the USDC stablecoin, faces severe criticism from blockchain investigator ZachXBT. The investigator alleges that Circle took over four months longer than other major stablecoin issuers to blocklist addresses linked to the notorious Lazarus Group.

ZachXBT claims that this delay allowed Circle to profit from transactions associated with the North Korean hacking group, which has been implicated in numerous high-profile crypto heists.

The Indodax Hack

The accusations came after a recent hack on Indonesian crypto exchange Indodax, attributed to the Lazarus Group.

The September 11 attack resulted in over $20 million theft, forcing the exchange to suspend operations temporarily. Indodax has since resumed its services, but the incident highlights the ongoing threat the Lazarus Group poses.

Laundering $200 Million

Investigations reveal a disturbing trend: stablecoins being used to launder stolen funds. Evidence suggests the Lazarus Group managed to launder approximately $200 million from various crypto exploits into stablecoins, including USDT and USDC, between 2020 and 2023.

This has raised concerns about the role of stablecoins in facilitating illicit activities and the responsibilities of issuers in preventing such use.

"They pretend in public that it's the compliant stablecoin meant to help protect the ecosystem, but it is in reality not exactly true," ZachXBT commented.

Systemic Failure

ZachXBT's criticism extends beyond the recent incident, alleging a systemic failure by Circle to act promptly in cases of DeFi exploits and hacks.

Despite having a large staff, Circle needs an incident response team to handle issues arising from DeFi hacks or exploits. These accusations come amid intensifying discussions about stablecoin regulation and anti-money laundering efforts in the crypto space.

Action Taken

Recent updates from ZachXBT indicate that all four major stablecoin issuers—Paxos, Tether, Techteryx, and Circle—have blocked two specific addresses associated with the Lazarus Group, freezing a total of $4.96 million.

The addresses, 0x36f2D3871edd59d5C06DB8F0b12bE928d5922A70 and 0x12ED7f6ed0491678764c2b222A58452926E44DB6, held various stablecoins including USDT, BUSD, TUSD, and USDC.

According to the provided data, Circle was the last to act, blocking the USDC funds on September 14, 2024, nearly five months after other issuers took similar action.

An additional $1.65 million has been frozen at various exchanges, bringing the total amount frozen due to the investigation to $6.98 million.