$420M in Question: ZachXBT Claims Circle Failed to Act on Fraud Cases

Circle faces claims by ZachXBT over $420M illicit funds and delayed fraud cases response actions.

ZachXBT has raised serious concerns about Circle and its stablecoin USDC. They asserted that approximately 420 million dollars of illicit money were transferred without any action since 2022. This has brought the concern of how businesses handle security and user protection.

Circle Faces Questions Over Handling of Illicit Crypto Funds

Circle is known as a regulated company in the United States. It runs USDC, which is pegged 1:1 with the US dollar. The company can freeze funds and block suspicious wallets as well. However, ZachXBT asserted that these tools have not been utilized effectively.

According to him, Circle did very little regarding 15 large frauds. These instances involved North Korean-affiliated hacks. Consequently, enormous sums of money were transferred unhindered. This has raised the issue of compliance practices.

In addition, the Circle system has a wallet blacklist feature. It is able to prevent transfers in case of suspicion. Nevertheless, attackers were said to have transferred money through their own systems of Circle. This has concerned the speed of response and monitoring systems.

Major Hacks Highlight Delays in Response and Action

Drift Protocol of April 2026 was one of the biggest cases. Hackers stole 280 million and transferred 232 million USDC. They used over 100 transactions during six hours. Nevertheless, there was no money that was frozen during the period.

The other case was that of Cetus Protocol in May 2025. Hackers transferred 61 million USDC in 90 minutes. The wallet was allegedly blacklisted by Circle one month later. At this point, the money had been converted to Ethereum.

Equally, SwapNet was exploited in January 2026 for up to 16 million dollars. Approximately, the wallet of the attacker had held about 3 million USDC for two days. Orders to freeze the funds were issued but not fulfilled promptly.

The other example was the GMX hack in July 2025. Circle allegedly did not freeze the stolen money of $9 million. Such constant delays have caused serious concerns among the users and experts.

ZachXBT also has differences with other competitors, such as Tether. During large-scale events, Tether tends to freeze funds in hours. Conversely, Circle was late or absent in a number of instances.

Circle Under Spotlight as Trust and Security Concerns Emerge

All claims have not been publicly addressed by Circle. However, the company claims to be under strict compliance rules. It also claims to collaborate with law enforcement where necessary.

However, the stated $420 million value represents only official cases. ZachXBT reckons that the actual figure may be far greater. This indicates expanded threats within the crypto sphere.

Meanwhile, this scenario demonstrates the significance of expediency when it comes to crypto security. It emphasizes the importance of powerful systems and prompt replies. With the increase in digital assets, firms can encounter increased expectations from users and regulators.

Overall, Circle now faces rising pressure to improve response speed and compliance actions. In the meantime, ZachXBT identifies vulnerabilities that can compromise the trust and safety of users. With the rise of crypto, more aggressive regulation and quicker response will probably be required to safeguard funds and ensure trust throughout the digital asset economy.

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