Circle CEO Jeremy Allaire indirectly addressed criticism over the stablecoin issuer’s handling of crypto thefts during a press conference in Seoul, according to a report in CoinDesk. He stated that Circle will not freeze its USDC stablecoin without a court order or direction from law enforcement. Blockchain investigator ZachXBT had recently called out the company on X for failing to assist victims in the hours immediately after multiple exploits since 2022, incidents that led to combined losses exceeding $420 million across cases involving platforms like Drift, Cetus, and others.
Allaire emphasized that Circle avoids stepping into the role of transaction mediator absent a clear legal foundation. Of course, the company does indeed possess the technical means to do so. USDC smart contracts across supported blockchains include built-in functions that let Circle blacklist addresses or freeze balances outright, which is functionality some banks have found appealing. Allaire positioned USDC as an integrated element of the traditional financial system, echoing arguments that critics often level at stablecoins and other crypto projects they dismiss as decentralization theater.
1/ Welcome to the Circle $USDC files.
$420M+ in alleged compliance failures since 2022, including fifteen cases of the US-regulated stablecoin issuer taking minimal action against illicit funds. pic.twitter.com/OiWZz5MrVM
— ZachXBT (@zachxbt) April 3, 2026
“Circle follows the rule of law, and we are able to undertake actions such as freezing a wallet at the direction of law enforcement or the courts,” Allaire said.
The latest wave of scrutiny hit after the hack of Drift Protocol at the beginning of this month. Attackers that were allegedly tied to a six-month North Korean intelligence operation gained access to sensitive private keys associated with the protocol via social engineering and other techniques to drain roughly $285 million in assets within 12 minutes. The attackers then bridged about $232 million in USDC from Solana to Ethereum via Circle’s own cross-chain transfer protocol. Circle could have blacklisted the attacker addresses and halted movement of the stolen USDC but did not act without a formal legal directive.
Tether, Circle’s largest competitor, follows a noticeably more proactive policy on freezes. In one recent case, Tether blacklisted five Tron addresses and froze $182 million in USDT linked to Venezuelan state oil company PdVSA’s efforts to evade sanctions. The company says it has frozen more than $4.2 billion in illicit funds overall since launch, including over $500 million earlier this year, at the request of Turkish authorities investigating an illegal gambling and money-laundering ring. Crypto journalist Laura Shin highlighted the dumbfounding contrast on X, stating, “I find this rather ironic. Circle is registered in 50 states and subject to FinCEN oversight. Tether is in El Salvador with basically no regulatory supervision.”
I find this rather ironic. Circle is registered in 50 states and subject to FinCEN oversight. Tether is in El Salvador with basically no regulatory supervision.
— Laura Shin (@laurashin) April 8, 2026
Of course, there’s also the reality that picking and choosing when to intervene on short notice may simply be a legal or liability can of worms that Circle does not want to open. “If I were Circle’s lawyer I would not advise them any differently,” crypto lawyer Gabriel Shapiro posted on X.
Supporters of Circle’s approach maintain that the company is simply respecting the decentralized finance (DeFi) maxim of code is law. Columbia Business School adjunct professor Omid Malekan made the case in a recent X post responding to the Drift fallout. “If Circle and other stablecoin issuers implement arbitrary freeze/seize functions beyond what the law requires, then not only is code not law, but also law is not law,” he wrote. “Instead what a single executive inside a single corporation decides is law.”
In practice, the very existence of freeze functions undercuts the decentralization narrative of the technology. Stablecoins have become the key centralizing force in crypto, with Circle and Tether now running their own dedicated blockchains and removing yet another point of distributed control. The New York Stock Exchange’s recent tokenized securities initiative on blockchain rails points to the same trend with regulated securities rather than currency.
Notably, the U.S. Treasury moved on stablecoins last week with proposed rules under the GENIUS Act. The guidance would require issuers to adopt stronger anti-money-laundering and sanctions compliance programs, treating them more like conventional financial institutions responsible for monitoring and blocking illicit flows. In the past, some regulators have floated address whitelisting as a logical follow-on step, restricting transfers to pre-approved and identifiable wallets.
True cypherpunks still push for the uncensorable money described in the Bitcoin whitepaper, but many crypto companies now operate like regulated fintech outfits in disguise. Sony, Meta, and many other well-known institutions have signaled plans to issue or integrate stablecoins in the near future, but the current trajectory of this technology suggests these assets could soon carry the same compliance burdens and oversight as bank deposits, placing them well outside the realm of what Satoshi originally envisioned. That said, the level of personal responsibility involved with true self custody of digital assets has proven problematic over the years, as illustrated recently by a musician losing his life savings to a malicious crypto wallet.
