Blockchain investigator ZachXBT has leveled serious accusations against Circle, the issuer of the USDC stablecoin, claiming the company allowed over $420 million in compliance failures since 2022. The allegations focus on Circle's handling of freeze requests following high-profile exploits, including the April 1 Drift incident where $232 million in USDC moved unchecked.

USDC's centralized control features—including blacklist and freeze functions—have come under fire. ZachXBT contends Circle markets itself as a regulated entity with robust compliance, yet repeatedly failed to act swiftly when illicit funds remained in freezable wallets. The thread cites multiple exploits, including 2025's Cetus Protocol and 2026's SwapNet incidents, as evidence of systemic issues.

These revelations strike at the heart of stablecoin governance. As a fiat-backed asset touted for its regulatory compliance, USDC's alleged shortcomings could ripple through crypto markets. The stablecoin's centralized safeguards, once seen as protective measures, now face scrutiny as potential points of failure.