Stablecoin issuer Circle is facing renewed criticism from the crypto security community after more than $3 million in stolen USDC remained unfrozen for hours following a reported theft linked to SwapNet users.
Summary
- A commenter on
- Blockchain researcher ZachXBT called Circle a “bad actor” and questioned the company’s approach to user protection.
- Circle has pursued closer ties with regulators and traditional financial institutions as it expands USDC across multiple blockchains, but critics say enforcement has sometimes been slow or inconsistent.
A message circulating on
“Will @circle spare this guy his retirement savings,” the post asked, “or will they instead ask for a US court order to ‘prove’ something completely publicly verifiable in the chain?”
Blockchain researcher ZachXBT amplified the criticism by calling Circle a “bad actor” and questioning the company’s approach to user protection. “Why would anyone continue to build on $USDC if you never take care of your users as a centralized stablecoin issuer?” he wrote.
The incident has reignited a long-running debate over the responsibilities of centralized stablecoin issuers, especially during hacks and exploits.
Unlike decentralized assets, centralized stablecoins like USDC and USDT can be frozen by their issuers, a feature often touted as protection against theft. According to Proteahackers typically try to quickly swap frozen assets for alternatives like DAI or ETH, which can then be laundered through mixers like Tornado Cash.
In this case, critics say the delay increases the risk that the stolen money could still be moved or laundered, despite remaining visible in the chain.
Why it matters
Circle, which issues USDC, is one of the largest stablecoin operators in the world. The company was founded in 2013 and is headquartered in Boston.
USDC is fully backed by cash and short-term U.S. Treasury bonds, according to Circle, and the company is positioning the stablecoin as a regulated, transparent alternative to other dollar-pegged tokens.
Circle has also sought closer ties with regulators and traditional financial institutions as it drives the adoption of USDC across multiple blockchains.
Still, the company has criticized what some analysts see as slow or inconsistent enforcement in previous incidents. The crypto security community previously raised concerns following last year’s $42 million GMX exploit, as well as the laundering of funds stolen by North Korea-linked hackers from Bybit and other platforms.
By comparison, rival stablecoin issuer Tether has frozen about $1.6 billion worth of USDT at more than 2,500 addresses, according to data from a Dune Analytics dashboard maintained by AMLBot.
Circle, by contrast, has frozen about $110 million in USDC at fewer than 500 addresses, the data shows.
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