Blockchain investigator ZachXBT claims that Circle, the issuer of the USDC stablecoin, profited from transactions tied to the North Korean Lazarus Group due to delayed intervention.
Circle, the company responsible for USDC, is facing criticism from blockchain investigator ZachXBT for allegedly taking too long to blacklist funds connected to the notorious Lazarus Group, a hacking group linked to North Korea. According to ZachXBT, Circle’s delay lasted over four months compared to other major stablecoin issuers, allowing the company to potentially benefit from illicit transactions.
These accusations followed a recent hack on the Indonesian crypto exchange, Indodax, which took place on September 11. The Lazarus Group was allegedly behind the attack, resulting in the theft of over $20 million. The hack forced Indodax to halt its operations temporarily.
Laundering Through Stablecoins
Reports indicate that stablecoins, including USDC and USDT, are being used to launder stolen cryptocurrency. Between 2020 and 2023, the Lazarus Group allegedly funneled approximately $200 million through these stablecoins, raising concerns about their role in facilitating criminal activities. Critics argue that issuers like Circle should take greater responsibility to prevent such misuse.
ZachXBT also pointed out that Circle has been slow to respond in other cases involving decentralized finance (DeFi) hacks. The investigator noted that despite having a significant workforce, Circle lacks a dedicated incident response team for handling security breaches related to DeFi exploits. This criticism comes amid growing debates about the need for stronger regulation of stablecoins and the enforcement of anti-money laundering measures within the cryptocurrency industry.
Major Issuers Respond, but Circle Lags
ZachXBT’s findings reveal that all four major stablecoin issuers—Paxos, Tether, Techteryx, and Circle—eventually blacklisted two addresses tied to the Lazarus Group. These addresses, 0x36f2D3871edd59d5C06DB8F0b12bE928d5922A70 and 0x12ED7f6ed0491678764c2b222A58452926E44DB6, were used to launder various stablecoins, including USDT, BUSD, TUSD, and USDC, with a total of $4.96 million frozen across these platforms.
However, Circle was the last to take action, freezing the associated USDC on September 14, 2024—nearly five months after the other issuers blacklisted the same addresses. In total, $6.98 million has been frozen, including funds held on different exchanges as part of the ongoing investigation.
ZachXBT has previously led several high-profile blockchain investigations, including uncovering Martin Shkreli’s involvement with TrumpCoin and linking a hack on GCR accounts to a Solana meme coin team.
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Disclaimer:This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing in any cryptocurrency.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your research before investing in any cryptocurrency.
