Circle CEO Jeremy Allaire issued a stark warning today, stating the company will not freeze USDC transactions without a formal court order, even as the stablecoin becomes a frequent target in major crypto exploits. This firm stance comes amid growing pressure for issuers to actively prevent hacking losses, with USDC's high liquidity making it a prime vehicle for attackers draining funds from multiple trading pairs and lending vaults. Allaire emphasized the policy during a press conference in Seoul, reinforcing Circle's commitment to legal due process while acknowledging the potential responsibility it faces as one of the most influential stablecoin providers in the digital asset ecosystem.
The news that USDC was freezeable sparked mixed reactions in the crypto community. Overall, the ability to claw back funds from hacks was seen as a positive development. Even censorship-free USDT tokens applied limited freezes.
In the case of Drift Protocol, some of the exploit addresses were identified within the first hours of the hack, but Circle did nothing to freeze the funds. Immediate swaps through DeFi allowed the exploiter to disguise some of the funds.
The Drift Protocol exploiter began spending portions of the available USDC to buy ETH, which could then be mixed to make tracing nearly impossible.
Compared to previous years, token freezes declined in 2025 and early 2026. In the past quarter, most attacks targeted DeFi protocols, which operate under much weaker oversight.
In some Web3 cases, Circle only blacklisted and froze addresses months after the exploit, after the funds were moved and laundered.
To date, USDC has frozen only 602 addresses, totaling 2,886 wallets for Tether’s USDT. In 2026, Circle froze 122 addresses, with 109 in February alone. Analysts noted that Circle’s indecision and long wait times may make USDC even more appealing to hackers.
The solution to Circle refusing to freeze funds for anything other than a court order is not to carve out a bunch of exceptions, it’s to create a Chancery court that moves at the speed of the internet
— nic carter (@nic_carter) April 13, 2026
Scanning for suspicious addresses is not automated or facilitated by AI; it depends on ad hoc systems for notification and decision-making. As a result, researcher ZachXBT noted crypto has lost up to $420M in USDC since 2022 for failing to act when directed to known exploit addresses.
USDC is not only stolen in major hacks. As more wallets adopt the stablecoin, they also become victims of address poisoning and dusting. USDC is among the tokens most often targeted for exploits due to its high adoption rate and liquidity through both DeFi and centralized exchanges.
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