Blockchain investigator ZachXBT has accused Circle of profiting from transactions linked to the notorious North Korean Lazarus Group hacking organization. According to the claims, Circle delayed blacklisting funds connected to the group for more than four months—significantly longer than other major stablecoin issuers. This serious accusation raises concerns about Circle’s commitment to preventing illegal activities like money laundering in the crypto space.

Circle's Alleged Failings

ZachXBT took to social media to criticize Circle, highlighting the platform's poor track record in dealing with DeFi hacks and exploits. He noted that Circle had consistently failed to blacklist addresses tied to illegal activities, claiming that the company instead profited from these transactions.

Fuck Circle Fuck @jerallaire you do not care at all about the ecosystem except extracting from it.

Not once have you ever blacklisted after a DeFi exploit / hack when there was ample time while you continue to profit off the transactions.

You took 4.5 months longer than every… https://t.co/9TFn11UERU

— ZachXBT (@zachxbt) September 14, 2024

He expressed frustration, saying:
“Not once have you blacklisted after a DeFi exploit or hack when there was more than enough time, while you continue to benefit from the transactions.”

The Lazarus Group and the Indodax Hack

The Lazarus Group, a North Korean hacking organization, has been linked to several high-profile cyberattacks. Most recently, they were implicated in a hack of the Indonesian crypto exchange Indodax, resulting in the theft of millions in digital assets. Following the attack, Indodax had to temporarily suspend its operations to assess the extent of the damage before gradually reopening deposit, withdrawal, and staking services.

ZachXBT revealed that four stablecoin issuers, including Tether, Circle, Paxos, and Techteryx, blacklisted two addresses linked to the Lazarus Group. These addresses held millions in various stablecoins, with additional funds frozen by exchanges, bringing the total frozen assets to nearly $7 million. Investigations suggest that the Lazarus Group has been using stablecoins to launder stolen funds.

The Scale of Lazarus Group's Laundering Efforts

Evidence shows that between 2020 and 2023, the Lazarus Group successfully laundered millions of dollars through stablecoins like USDT and USDC, which raised red flags in the crypto community. Circle’s delayed response to the blacklisting of these funds has brought intense scrutiny from industry watchers.

ZachXBT’s accusations have sparked a wave of criticism against Circle and its CEO, Jeremy Allaire. Critics argue that Circle appears to prioritize profit over the integrity of the crypto ecosystem, undermining its public claims of being a compliant and trustworthy stablecoin issuer.

Circle’s Response and Industry Criticism

ZachXBT has highlighted a key issue within Circle: the lack of an incident response team dedicated to handling problems caused by DeFi hacks or other exploits. This gap in their security measures is particularly troubling, given the increasing focus on stablecoin regulation and anti-money laundering initiatives.

Critics argue that Circle, despite its size and resources, has failed to act responsibly in handling stolen or laundered funds. This concern grows more pressing as stablecoins are increasingly connected to state-sponsored hacking groups like the Lazarus Group.

The Larger Implications

The Lazarus Group has allegedly stolen billions from the cryptocurrency industry through multiple high-profile attacks. These stolen funds are believed to support North Korea’s weapons development. The ongoing relationship between stablecoins and these state-backed hackers presents a significant challenge for regulators and the crypto industry alike.

In conclusion, the accusations against Circle highlight a growing concern in the crypto world: the need for stricter oversight and faster action to combat money laundering and illegal activities. With state-sponsored groups like Lazarus exploiting these gaps, the future of stablecoins and their role in the global financial system remains uncertain.