Criticized for USDC freeze speed being too slow! Circle CEO: Will only freeze upon court order, refusing to freeze privately

Circle CEO Jeremy Allaire said that unless the company receives a court order or a directive from law enforcement, it will not proactively freeze wallet addresses. Even amid hacker-related money laundering controversies and community backlash, Circle insists on operating in accordance with the rule of law.

Jeremy Allaire Sets Circle’s Enforcement Bottom Line

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

Jeremy Allaire emphasized that $USDC is a regulated financial product, and its operations must strictly comply with the rule of law (Rule of Law).

When a hacker attack occurs, Circle should follow statutory procedures to intervene. This statement links Circle’s actions to legal compliance obligations, establishing the basic principle that when dealing with the flow of illegal funds, the company should prioritize following statutory procedures over moral discretion.

According to available operational data, in 2026 Circle has frozen only 122 addresses, most of which were concentrated in February. Compared with its main competitor Tether ($USDT), whose intervention style is more active, Circle’s approach appears rather restrained.

Jeremy Allaire believes that stablecoin issuers do not have the authority to arbitrarily dispose of users’ assets outside the legal framework, and that abusing such authority would harm the integrity of the entire financial system.

He views $USDC as part of the traditional financial system, arguing that asset seizure or blacklisting should be handled in the same way as bank accounts are subject to judicial oversight—following established legal processes. Although there is controversy in the market about the speed of such legal procedures, Jeremy Allaire insists that this is the only way to maintain the long-term stability and trust of regulated stablecoins.

On-Chain Detective and the Community’s Fury! $420 Million Loss Raises Effectiveness Questions

However, Circle’s insistence on “doing things according to law” is regarded by the on-chain security community—who seeks rapid response—as a shield for hackers’ money laundering. The well-known blockchain detective ZachXBT has repeatedly publicly criticized Circle’s handling. He said that since 2022, because Circle failed to take timely action against known hacker addresses, an estimated 4.2 billion worth of $USDC has flowed into illegal industries.

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

A recent major case involved the attack on Drift Protocol, which suffered losses of up to 2.8 billion USD, including 2.3 billion USD of $USDC that was frequently transferred within 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. Ultimately, the hacker used a decentralized exchange (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. As of now, $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 lengthy waiting times may make $USDC a more attractive target for hackers.

Especially in early 2026, DeFi protocols became a prime target for attacks. Because these protocols often lack strict regulation, hackers typically take advantage of $USDC ’s high liquidity and broad 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) that can keep pace with online transfer speeds in order to counter hackers’ rapid transactions.

Further Reading
DeFi platform Drift was hacked on April Fools’ Day! Hackers drained $270 million in assets; admin key was a vulnerability
Who is to blame for the Drift hack? Hacker cross-chained assets but failed to freeze; ZachXBT sharply criticizes Circle’s negligence

Conflict Between Corporate Discretion and DeFi Trust Foundations

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

He believes that if a company’s executives can arbitrarily cut off fund flows based on personal judgment or public opinion, then the principles of “code is law” and “law is law” will be fundamentally erased.

Image source: X/@malekanoms Columbia Business School adjunct professor Omid Malekan warns that if stablecoin issuers are permitted to implement arbitrary freezes or confiscations outside legal mandates, it would seriously damage DeFi’s core foundation

Under such circumstances, the personal will of a single corporate executive would override the law. This overly centralized power would erode users’ 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 strategy internally—to position itself as an institutionalized compliance tool. Circle’s technical architecture allows it to rapidly freeze specific addresses, but the exercise of such power must come with a high level of transparency and constitutionality. Currently, Circle relies on ad hoc (point-to-point) notification and decision systems to avoid automated AI scanning mechanisms, precisely to prevent harming innocent users.

However, this also results in 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 strike a balance between the pursuit of ultimate decentralization trust and the need to protect users’ asset security.

Why Sanctioned Parties Avoid $USDC and Look Elsewhere

In addition to hacker attacks, $USDC ’s geopolitical role has also attracted considerable attention. In response to the Financial Times (Financial Times) report alleging that Iran may require the use of cryptocurrency as tolls to pass through the Strait of Hormuz (Strait of Hormuz), Jeremy Allaire explicitly denied the possibility of $USDC being used for such purposes at the Seoul press conference. He said that such a scenario is extremely unlikely, because Circle strictly enforces global regulatory standards and sanctions lists.

• Related news: Strait of Hormuz reopened! Iran asks for Bitcoin to pay tolls; Persian Gulf still has “big ship 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 trying to evade sanctions. Instead, sanctioned parties typically prefer alternative options with lower regulatory oversight and poorer transparency, or offshore stablecoins.

Jeremy Allaire’s remarks highlight Circle’s determination to go down the path of “traditional financial mainstreaming.” As $USDC adoption continues to grow, it has shown vulnerability to new types of scams such as Address Poisoning and Dusting.

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