Circle, the issuer of USDC, is under intense public pressure after failing to utilize its stablecoin's freeze-and-blacklist mechanisms to halt the movement of approximately $270–$285 million stolen in a major exploit of Solana's Drift Protocol. The backlash, fueled by critics on social media, centers on allegations that the company did not act to disrupt the illicit transfers from the decentralized venue.
The timeline behind the accusations centers on April 1, 2026, when Drift Protocol was drained of about $285 million, with the exploit reportedly representing more than half of the protocol’s total value locked (TVL).
A substantial portion of the stolen assets, according to reporting surrounding the incident, was converted and routed through USDC via Circle’s Cross-Chain Transfer Protocol (CCTP).
Circle did not immediately respond to the online criticism. After weeks of silence, the company published an official blog post authored by Chief Strategy Officer Dante Disparte, addressing the dispute over freezing and compliance actions.
Disparte said Circle’s ability to freeze USDC is not discretionary in the way critics sometimes frame it, arguing instead that freezing is something Circle does only when the law compels action.
The firm’s executive wrote that “when Circle freezes USDC,” it is not because the company has decided unilaterally to remove assets from a specific party. Rather, he said the firm freezes because “the law requires us to act.”
Disparte further linked the freezing debate to a broader regulatory goal, saying Circle is working with policymakers in the US and internationally to develop “safe harbor” frameworks and to modernize regulations.
The aim, he wrote, is to create legal structures that allow issuers, exchanges, and other ecosystem participants to respond more decisively to illicit activity—faster, but without opening new pathways for abuse that could undermine open financial systems.
Despite the firm’s defense, critics have continued to challenge the company’s position. One of the responses came from on-chain sleuth ZachXBT, who posted “The Circle USDC Files” last week.
In that report, ZachXBT alleged more than $420 million in compliance failures. He now addressed the blog statement, claiming Circle’s actions resulted in 240 million directly funding North Korea across multiple hacks—while arguing that Circle had hours to act in clear-cut cases involving illicit transfers.
ZachXBT’s criticism attacked the apparent mismatch between the firm’s stated freeze framework and what he described as operational delays or choices not to use available tools quickly enough. He questioned Circle’s compliance record explicitly, asking, “How is that compliance for USDC?”
Finally, ZachXBT argued that Circle’s blog post “contradicts itself” and attributed the controversy to a leadership problem, rather than a purely legal or procedural constraint.
As of this writing, the firm’s stock (CRCL) was trading at $88.78, up 4% in Friday’s trading session.
Featured image from OpenArt, chart from TradingView.com
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