Circle Under Fire After Stolen USDC Goes Unfrozen for Hours
Stablecoin issuer Circle is facing fresh backlash from the crypto security community after more than $3 million in stolen USDC sat untouched for hours following a reported theft linked to SwapNet users.
The funds were clearly visible on-chain.
They weren’t moved.
They weren’t hidden.
And yet, nothing happened.
That delay has sparked a loud debate about how Circle handles stolen funds — and whether it actually protects users when it matters most.
“Do we need a court order for something everyone can see?”
A post that spread quickly on X pointed out that the stolen USDC had remained in the original theft address on Base for more than eight hours.
The post asked a blunt question:
“Will @circle save this man his retirement savings, or will they ask for a U.S. court order to ‘prove’ something that’s already public on-chain?”
That message struck a nerve.
ZachXBT calls Circle a “bad actor”
Well-known blockchain investigator ZachXBT amplified the criticism and didn’t hold back.
He called Circle a “bad actor” and questioned why developers should keep building on USDC at all.
“Why should anyone continue building on $USDC,” he wrote,
“when you never take care of your users as a centralized stablecoin issuer?”
This hits at the core promise of centralized stablecoins
One of the biggest selling points of centralized stablecoins like USDC and USDT is that they can be frozen when funds are stolen.
That feature is often marketed as protection.
In most hacks, attackers try to move fast — swapping USDC into assets like ETH or DAI, then laundering them through mixers like Tornado Cash before issuers can react.
In this case, critics say the slow response gave hackers unnecessary time and increased the risk of the funds being moved.
Circle’s reputation vs. its response
Circle positions USDC as a regulated, transparent, and institution-friendly stablecoin. The company says USDC is fully backed by cash and short-term U.S. Treasuries and has pushed hard to expand across multiple blockchains while strengthening ties with regulators and banks.
But this isn’t the first time people have questioned Circle’s enforcement speed.
The crypto security community raised similar concerns after:
- The $42 million GMX exploit
- Funds linked to North Korean hackers being laundered after the Bybit incident
How Circle compares to Tether
The contrast with Tether is hard to ignore.
According to Dune Analytics data:
- Tether has frozen about $1.6 billion USDT across more than 2,500 addresses
- Circle has frozen around $110 million USDC across fewer than 500 addresses
That gap is fueling questions about consistency, urgency, and priorities.
Why this matters
Circle is one of the largest stablecoin issuers in the world. When it hesitates during clear thefts, it doesn’t just affect one victim — it shakes confidence across the ecosystem.
The core question coming out of this incident is simple:
If a centralized stablecoin issuer won’t act quickly when theft is obvious and public,
what’s the point of centralization at all?
For now, Circle hasn’t publicly explained the delay. But the pressure from the crypto security community is only getting louder — and this debate isn’t going away anytime soon.
