Criticized for the slow USDC freezing speed! Circle CEO: We will freeze only after the court’s order; we refuse to freeze it privately

Circle CEO Jeremy Allaire said that, unless it receives a court order or is required by law enforcement, the company will not proactively freeze wallet addresses. Even amid controversies over hacker money laundering and community criticism, Circle still insists on operating in accordance with the principles of the Rule of Law.

Jeremy Allaire Sets Circle’s Enforcement Bottom Line

As the global cryptocurrency market roils, Circle’s CEO Jeremy Allaire, at a press conference in Seoul, South Korea, made a clear statement on the most sensitive issue in the market: “asset freezing.” He pointed out that although Circle has the technical means to freeze specific wallet addresses, the company will not proactively intervene and freeze $USDC assets unless it receives a court order or an official instruction from law enforcement.

Jeremy Allaire emphasized that $USDC is positioned as a regulated financial product, and its operation must strictly comply with the principles of the Rule of Law.

When a hacker attack occurs, Circle should follow legal procedures to intervene. This statement ties Circle’s actions to legal compliance obligations, establishing a basic principle that when confronted with the flow of illegal funds, businesses should prioritize following legal procedures over making discretionary moral judgments.

Based on available operational data, Circle froze only 122 addresses in 2026, most of which were concentrated in February. Compared with its main competitor Tether ($USDT), which is more proactive in its intervention approach, Circle’s handling appears fairly restrained.

Jeremy Allaire believes that stablecoin issuers do not have the power to arbitrarily dispose of users’ assets outside the legal framework; if such authority is abused, it will harm the integrity of the entire financial system.

He views $USDC as part of the traditional financial system, arguing that asset seizure or blacklist handling should be carried out in the same way that bank accounts are subject to judicial oversight—following established legal processes. Although there is debate in the market about 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 Fury! Effectiveness Questions Triggered by a $420 Million Loss

However, Circle’s insistence on “doing things according to the law” is viewed by on-chain security communities that want a fast response as a shield for hackers’ money laundering. The well-known blockchain investigator ZachXBT has repeatedly criticized Circle’s handling publicly. He pointed out that since 2022, because Circle failed to take action promptly against known hacker addresses, an estimated 4.2 billion $USDC flowed into illegal industries.

Figure source: X/@zachxbt ZachXBT has repeatedly criticized Circle’s handling, accusing Circle of failing to take action promptly against known hacker addresses

A recent major case was the attack on Drift Protocol, which suffered losses of as much as $280 million, including $230 million of $USDC that was frequently transferred within a few hours. Even though the community quickly identified the attacker’s wallet, Circle refused to freeze the assets because it had not received a court order. In the end, the hacker used decentralized exchanges (DEX) to convert $USDC into Ether ($ETH), and used mixing tools to evade tracking.

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

Especially in early 2026, DeFi protocols became a prime target for attacks. Because these protocols typically lack strict regulation, hackers often take advantage of $USDC ’s high liquidity and broad lending pools to quickly carry out cross-chain money laundering. Although some in the community have proposed establishing “exception mechanisms” for hacker attacks, renowned commentator Nic Carter believes that the real solution is to build a digital court (Chancery Court) that can keep up with the network’s transaction speeds in order to counter hackers’ rapid transfers.

Further Reading
DeFi platform Drift hacked on April Fools’ Day! Hackers drained $270 million in assets, and the admin private key became a vulnerability
Who’s at fault for Drift being hacked? Cross-chain assets were not frozen; ZachXBT slams Circle for negligence

A Conflict Between Corporate Discretion and the Trust Foundation of DeFi

Regarding the controversy over whether Circle should have the authority to freeze assets immediately, scholars and industry experts hold sharply different views. Omid Malekan, an adjunct professor at Columbia Business School, warned that if stablecoin issuers were allowed to carry out arbitrary freezing or confiscation outside legal requirements, it would seriously undermine the foundation of decentralized finance (DeFi).

He believes that if a company’s executives can cut off the flow of funds based on personal judgment or public opinion, then the principles of “code is law” and “law is law” will both be completely eroded.

Figure source: X/@malekanoms Adjunct professor at Columbia Business School Omid Malekan warned that if stablecoin issuers were allowed to carry out arbitrary freezing or confiscation outside legal requirements, it would seriously undermine DeFi’s foundation

In this situation, the personal will of a single corporate leader would come before the law. Such over-centralized power would cause users to lose trust in DeFi systems, because the security of assets would no longer depend on mathematics and protocols, but on the issuer’s administrative decisions.

This view echoes Circle’s core internal strategy: positioning itself as a compliant, institutionalized tool. Circle’s technical architecture allows it to quickly freeze specific addresses, but exercising this power must come with a high degree of transparency and constitutionality. At present, Circle relies on an ad hoc notification and decision-making system to avoid automated AI scanning mechanisms, precisely to prevent harming innocent users.

However, this has also led to multiple cases where Circle only blacklisted addresses months after an attack—by which time the illicit funds had already been washed clean. This debate reflects a long-standing contradiction in the blockchain industry: how to strike a balance between the desire for maximum decentralization and the sense of trust, and the need to protect users’ asset security.

Why Sanctioned Parties Avoid $USDC and Turn Elsewhere

Besides hacker attacks, $USDC ’s geopolitical role has also drawn significant attention. In response to recent reports by the Financial Times claiming that Iran might require the use of cryptocurrencies as toll payments to pass through the Strait of Hormuz, Jeremy Allaire explicitly denied at the Seoul press conference that $USDC could be used for such purposes. He said this scenario is extremely unlikely because Circle strictly enforces global regulatory standards and sanctions lists.

• Related news: The Strait of Hormuz is open! Iran demands Bitcoin payments for tolls; the Persian Gulf remains “a huge ship traffic jam”

Because $USDC has a highly transparent technical structure and can be subject to judicial oversight at any time, it is not an ideal choice for entities or individuals attempting to evade sanctions. Instead, these sanctioned parties usually prefer alternative solutions with lower regulatory oversight and poorer transparency, or offshore stablecoins.

Jeremy Allaire’s remarks highlight Circle’s determination to take the “traditional financialization” path. As the adoption rate of $USDC continues to rise, it has shown vulnerabilities when facing new scams such as Address Poisoning and Dusting attacks.

Even so, Circle firmly believes that only through close cooperation with governments and law enforcement can stablecoins secure a foothold in mainstream economies. For Circle, maintaining consistency with the Rule of Law takes priority over intercepting short-term losses. This stance subjected it to intense public scrutiny in 2026, while also making $USDC the most compliant digital dollar asset in the eyes of institutional investors.