ZachXBT investigation report: Circle has repeatedly failed in compliance actions involving more than US$420 million

Comparing news, on-chain detective ZachXBT released an investigation report against Circle, saying that since 2022, the company has had poor compliance enforcement issues in a number of incidents involving illegal funds, involving a cumulative amount of more than US$420 million. According to the report, Circle, as the issuer of USDC, has always been known for being regulated and has a perfect compliance system. Its token contract also has the function of freezing and blocking addresses, and clearly reserves the right to restrict suspicious accounts in its terms of service. However, in many major security incidents, these mechanisms were not used in a timely and effective manner.

The report focuses on the attack on Drift Protocol on April 1, 2026, where approximately US$280 million of assets were stolen. The attackers transferred more than 232 million USDC from Solana to Ethereum within 6 hours through Circle's own cross-chain bridge CCTP, but no assets were frozen during this period. Similar situations have also occurred in attacks such as SwapNet, Cetus Protocol, and Mango Markets. In some cases, even though law enforcement agencies and industry experts have issued freeze requests, Circle has not acted in a timely manner, or even dealt with the assets after they have been transferred.

Furthermore, the report also pointed out that in the money laundering investigation involving the hacker group Lazarus Group, Circle's response was clearly lagging behind compared to other stablecoin issuers (such as Tether, Paxos, etc.). In some cases, the freeze operation was delayed for up to several months. Similar delays also occurred in the Ledger supply chain attack and the GMX attack. USDC stayed at the suspicious address for several hours or longer and was not frozen.

ZachXBT said in the report that this disclosure did not deny the value of Circle's products or stablecoins themselves, but emphasized that its compliance decisions have caused real and significant losses to the industry. He pointed out that in the past three years, due to many untimely actions, the DeFi ecosystem's cumulative losses have reached nine digits of dollars, while $420 million is only a conservative statistic from public cases, and the actual scale may be higher.

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