Criticized for freezing USDC too slowly! Circle CEO: Will only freeze upon court order, refusing to freeze privately

Circle CEO Jeremy Allaire states that unless ordered by a court or law enforcement, the company will not proactively freeze wallet addresses. Even in the face of hacker money laundering controversies and community criticism, Circle insists on operating in accordance with the rule of law.

Jeremy Allaire Establishes Circle’s Enforcement Bottom Line

Amid the turbulent global cryptocurrency market, Circle, a stablecoin issuer, CEO Jeremy Allaire, expressed a clear stance on the most sensitive market issue of “asset freezing” during a press conference in Seoul, South Korea. He pointed out that while Circle has the technical means to freeze specific wallet addresses, the company will not intervene and freeze $USDC assets unless it receives a court order or a formal directive from law enforcement.

Jeremy Allaire emphasized that $USDC is a regulated financial product, and its operation must strictly adhere to the rule of law.

In the event of a hacker attack, Circle should follow legal procedures for intervention. This statement links Circle’s actions to legal obligations, establishing a fundamental policy that the company will prioritize following legal procedures over moral discretion when dealing with illegal fund flows.

According to current operational data, Circle only froze 122 addresses in 2026, most of which occurred in February. Compared to its main competitor Tether ($USDT), which is more proactive in intervention, Circle’s approach appears quite restrained.

Jeremy Allaire believes that stablecoin issuers do not have the authority to arbitrarily dispose of user assets outside the legal framework, and such abuse of power could damage the integrity of the entire financial system.

He views $USDC as part of the traditional financial system, asserting that asset seizure or blacklisting should follow established legal processes similar to bank account regulation. Although there is controversy over the speed of these legal procedures, Jeremy Allaire insists that this is the only way to maintain long-term stability and trust in regulated stablecoins.

On-Chain Detective and Community Outrage! $420 Million Loss Sparks Effectiveness Doubts

However, Circle’s insistence on “acting lawfully” is seen by on-chain security communities seeking rapid response as a shield for hackers’ money laundering. Notable blockchain investigator ZachXBT has repeatedly criticized Circle’s handling. He pointed out that since 2022, due to Circle’s failure to act promptly on known hacker addresses, approximately $420 million of $USDC has flowed into illegal industries.

Image source: X/@zachxbt ZachXBT repeatedly criticizes Circle’s handling, accusing Circle of failing to act promptly on known hacker addresses.

A recent major case involved Drift Protocol, which was attacked, losing up to $280 million, with $230 million of $USDC being transferred frequently within hours. Even though the community quickly identified the attacker’s wallet, Circle refused to freeze assets because it had not received a court order. Ultimately, the hacker exchanged $USDC for Ethereum ($ETH) on decentralized exchanges (DEX) and used mixing tools to evade tracking.

Market data analysis also reflects a significant difference in law enforcement efficiency between Circle and Tether. To date, $USDC has frozen 602 addresses, while $USDT has frozen as many as 2,886 wallets. Analysts warn that Circle’s decision-making process and lengthy waiting times may make $USDC a more attractive target for hackers.

Especially in early 2026, DeFi protocols became prime targets for attacks. Due to the lack of strict regulation, hackers often exploit $USDC ’s high liquidity and extensive lending pools to quickly conduct cross-chain money laundering. Although some in the community have proposed establishing “exception mechanisms” for hacker attacks, renowned commentator Nic Carter believes the real solution is to build a digital court (Chancery Court) capable of keeping pace with online transfer speeds to counter hackers.

Further reading
DeFi platform Drift hacked on April Fools’ Day! Hackers drained $270 million, management keys exposed
Drift hack: Who’s at fault? Hackers cross-chain assets but fail to freeze, ZachXBT criticizes Circle’s negligence

Conflict Between Corporate Discretion and DeFi Trust Foundations

Regarding whether Circle should have the authority to freeze assets instantly, scholars and industry experts hold very different views. Omid Malekan, adjunct professor at Columbia Business School, warns that allowing stablecoin issuers to implement arbitrary freezing or confiscation outside legal requirements would severely undermine the foundations of decentralized finance (DeFi).

He argues that if corporate executives can cut off funds based on personal judgment or social opinion, the principles of “code is law” and “law is law” will be fundamentally eroded.

Image source: X/@malekanoms Columbia Business School adjunct professor Omid Malekan warns that permitting stablecoin issuers to carry out arbitrary freezes or confiscations outside legal mandates will seriously damage DeFi’s core.

In such a scenario, the personal will of a single corporate leader would override the law. This excessive centralization of power could erode user trust in DeFi systems, as asset security would no longer depend on mathematics and protocols but on the issuer’s administrative decisions.

This view echoes Circle’s internal strategic positioning, which aims to position itself as a compliant institutional tool. Circle’s technical structure allows rapid freezing of specific addresses, but the exercise of this power must be highly transparent and constitutional. Currently, Circle relies on ad hoc notification and decision systems, avoiding automated AI scanning mechanisms to prevent harming innocent users.

However, this has led to multiple cases where Circle only blacklists addresses months after an attack, by which time illegal funds have already been laundered. This debate reflects a long-standing contradiction in the blockchain industry: how to balance the pursuit of ultimate decentralization and trust with the need to protect user assets.

Why Sanctioned Parties Avoid $USDC and Turn Elsewhere

Besides hacker attacks, $USDC ’s role in geopolitical issues has also attracted attention. Regarding recent reports by the Financial Times suggesting Iran may require cryptocurrency payments for passage through the Strait of Hormuz, Jeremy Allaire explicitly denied the possibility of $USDC being used for such purposes at the Seoul press conference. He stated that such scenarios are highly unlikely because Circle strictly enforces global regulatory standards and sanctions lists.

• Related news: Strait of Hormuz opened! Iran demands Bitcoin payments for tolls, Persian Gulf remains “big ship jam”*

Due to $USDC ’s highly transparent technical structure and its constant oversight by judicial authorities, entities or individuals attempting to evade sanctions find $USDC an unsuitable choice. Instead, sanctioned parties tend to use less regulated, less transparent alternatives or offshore stablecoins.

Jeremy Allaire’s remarks highlight Circle’s determination to move along the “traditional finance” path. As $USDC adoption increases, it shows vulnerabilities against new scams like address poisoning and dusting attacks.

Nevertheless, Circle firmly believes that only through close cooperation with governments and law enforcement can stablecoins secure a place in mainstream economies. For Circle, maintaining legal consistency takes precedence over short-term interception of losses. This stance has subjected it to significant public criticism in 2026, while also making $USDC the most compliant digital dollar asset in the eyes of institutional investors.