USDC Issuer Circle Accused of ‘Profiting’ From Lazarus Group Hack

USDC issuer Circle is facing serious accusations after blockchain sleuth ZachXBT called out the company for allegedly ‘profiting’ from transactions linked to the North Korean hacker group Lazarus. ZachXBT, known for his investigative work in the Web3 space, took to social media platform X to criticize Circle and its CEO Jeremy Allaire. The criticism came in response to failure of blacklisting wallets involved in illicit activities in a timely manner.

USDC Issuer Faces Backlash

According to ZachXBT, Circle delayed blacklisting funds associated with the Lazarus Group by 4.5 months compared to other major stablecoin issuers. He also expressed frustration with Circle’s apparent lack of action in preventing the group from using its platform for money laundering.

“Not once have you ever blacklisted after a DeFi exploit/hack when there was ample time, while you continue to profit off the transactions,” ZachXBT wrote. These accusations come after the USDT issuer, along with other stablecoin issuers, blacklisted two wallet addresses linked to Lazarus Group.

The group, notorious for its involvement in numerous crypto hacks, is suspected of carrying out a recent exploit on the Indonesian crypto exchange Indodax. The hack occurred on September 11. This fiasco led to the theft of more than $20 million from the exchange, prompting it to shut down temporarily while it assessed the damage.

Later, the Indodax exchange reopened for transactions, with deposit, withdrawal, and staking services being restored gradually. ZachXBT’s findings revealed that four major stablecoin issuers have blacklisted two addresses associated with the Lazarus Group. These include Tether, Circle, Paxos, and Techteryx.

These wallets hold a combined $4.96 million, spread across multiple stablecoins, including USDT, USDC, BUSD, and TUSD. Additionally, $1.65 million belonging to the hackers has been frozen by various crypto exchanges as part of an ongoing investigation. Hence, in total, $6.98 million has been frozen from the wallet addresses connected to the group.

Brief History of Lazarus Group’s Attacks

Furthermore, this is not the first time the Lazarus Group has been linked to large-scale crypto thefts. ZachXBT previously reported that the North Korean hackers laundered around $200 million from various exploits into stablecoins like USDT and USDC between 2020 and 2023.

Moreover, this recent incident continues to highlight the role stablecoins play in money laundering schemes within the crypto domain. Meanwhile, other stablecoin issuers have taken more proactive steps to combat illicit activity.

Tether recently partnered with Tron and TRM Labs to form the T3 Financial Crime Unit, a task force dedicated to fighting fraud and other illegal activities involving USDT. According to Tether, the T3 unit has already frozen more than $12 million in USDT tied to scams and fraudulent operations.

The USDC issuer has not yet responded directly to ZachXBT’s accusations. On the other hand, discussions on stablecoin regulation and anti-money laundering efforts are intensifying. This comes amid rising concerns over the use of digital assets for illegal activities by state-backed hacker groups like Lazarus.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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