Circle CEO Jeremy Allaire has responded to mounting criticism about the company’s handling of suspicious transactions, explaining the approach taken with its stablecoin USDC. Recent accusations suggest that Circle has been too slow to intervene in illegal transfers, sparking a heated debate within the digital asset community.
Circle emphasizes regulatory compliance
Circle, the US-based stablecoin issuer and operator of USDC, oversees over $50 billion in outstanding USDC, making it the second-largest dollar-backed stablecoin in the market. Speaking at a press conference in Seoul, CEO Jeremy Allaire underscored that the company will only freeze wallets or block transactions when there is a solid legal basis, such as a court order or law enforcement request.
Allaire stated that Circle’s scope of action is strictly dictated by financial regulations and legal procedures, clarifying that the company does not unilaterally freeze any address or wallet in the absence of such official direction.
According to Jeremy Allaire, “Circle has a clearly defined legal responsibility. We can freeze wallets only if we receive a direct order from law enforcement or a court.”
It was highlighted that USDC is an integral part of the financial system and that Circle refrains from intervening on its own initiative during cases of misuse, hacks, or cyberattacks. This approach reflects Circle’s strategic preference for closer cooperation with institutional regulators.
Industry criticism and comparisons
In contrast with Circle, stablecoin competitor Tether has gained a reputation for acting more swiftly and proactively against illegal fund transfers linked to its USDT token. Tether has responded to hacks and unauthorized transfers by freezing wallets within hours, rapidly blacklisting millions of dollars’ worth of assets in incidents involving platforms such as Ledger and Remitano. During the same events, there were claims that USDC tokens remained untouched for extended periods.
The controversy intensified in recent weeks, fueled by blockchain researcher ZachXBT’s social media postings. He alleged that, over the past two years, at least 12 incidents involving USDC resulted in more than $420 million in illicit funds being moved without immediate counteraction. For example, in a hack targeting Drift Protocol—a case suspected of ties to North Korea—$230 million in USDC was reportedly transferred across chains.
Likewise, during attacks on platforms including SwapNet, Cetus, and Nomad, large amounts of stolen USDC reportedly went for long stretches without being frozen. Observers noted that, despite Circle’s technological capability, the company was slow to respond in these cases.
Addressing these criticisms, Omid Malekan, adjunct professor at Columbia Business School, argued that reacting too quickly can create its own set of risks. He warned that arbitrary freezing or seizure of digital assets outside the legal framework could undermine the core principles of decentralized finance (DeFi).
Omid Malekan maintained, “If Circle and other stablecoin companies begin exceeding legal requirements, not only does the principle ‘code is law’ disappear, but the rule of law itself is eroded, as decisions would rest solely with a single company’s discretion.”
Malekan believes that unauthorized or discretionary interventions can seriously damage user trust and run counter to the decentralized spirit these systems were designed to uphold.
