A new on-chain report alleges over $420 million in compliance lapses involving the USDC stablecoin since 2022. The findings question the effectiveness of Circle’s controls, citing multiple incidents where funds linked to hacks were not frozen or were frozen only after significant delays. Circle has not publicly responded to the unverified claims.
A new report has raised questions over the effectiveness of Circle‘s compliance controls for its USDC stablecoin. The allegations cite more than $420 million in suspected lapses tied to illicit fund flows since 2022.
The findings, shared on 3 April, compile multiple incidents where USDC linked to hacks was not frozen promptly. Regulators have not independently verified the claims made in the report.
The recent $280 million exploit of Drift Protocol is highlighted as a key example. The report claims the attacker bridged over $232 million in USDC across chains over several hours without any freeze.
The attacker has been linked to North Korean actors by blockchain analytics firm Elliptic. However, this attribution remains unconfirmed by authorities.
The report also points to a pattern of delayed or absent freezes in other major exploits. These include the $223 million Cetus Protocol exploit in 2025 and the $110 million Mango Markets exploit in 2022.
In several cases, other stablecoin issuers like Tether allegedly acted more quickly. The report claims USDC remained accessible during the early stages of incidents like the $190 million Nomad Bridge hack.
Circle markets USDC as a regulated stablecoin with compliance features. Its terms of service state it may restrict funds “at its sole discretion.”
The report does not dispute these tools but questions their consistent application. It highlights challenges in fast-moving, cross-chain exploit scenarios.
The allegations emerge as stablecoins face increased regulatory scrutiny worldwide. If substantiated, they could pressure issuers to prove real-time enforcement capabilities.
The situation underscores operational challenges in monitoring fragmented crypto environments. It raises broader questions about stablecoin oversight as they become core financial infrastructure.
