USDC (USDC)

🔍 On-chain sleuth ZachXBT alleges Circle failed to freeze illicit USDC funds in 15 cases.

According to a report by ZachXBT cited by Cointelegraph, Circle had "several hours or days" to act on $420 million in allegedly illicit USDC transactions since 2022 but did not. The accusations center on what the investigator calls compliance failures.

ZachXBT just dropped receipts on Circle and $420 million in illicit funds not frozen since 2022…

But I think many are missing the important message here:

The real issue is that centralized stablecoins are fundamentally broken and that we have strayed too far from Web3 ideals

Using centralized stablecoins that can be frozen, burned, or wiped at any given time. Seriously?

Basically just a CBDC in disguise. What are we doing?!?

Anyways, the Drift exploit is the headliner with $285 million in stolen USDC moved through Circle's own CCTP bridge for 6+ hours during US business hours.

Easy to see and easy to track and nothing done

While the same company froze 16 unrelated business wallets last month for a sealed civil case

Instantly with no public explanation 🤨

So the freeze button works. It just works selectively and is controlled by a single entity.

Here's what most are missing though

Circle isn't just being hypocritical. They're trapped in a lose lose situation.

Freeze too much? Centralized dystopia
Freeze too little? Enabling crime

They freeze when there's clear legal authority

Court orders
Sealed cases
Government pressure

But a real-time exploit? That's messy and possibly a liability risk

Does that excuse $420 million in inaction? No.

But the real issue is that we built an entire ecosystem dependent on centralized gatekeepers and we don’t think twice about it

Don’t know about you but thats not the Web3 I signed up for!