Circle Internet CEO Jeremy Allaire announced in Seoul that the company will not freeze USDC wallets without a formal court order or law enforcement direction.
Allaire positioned the dollar-pegged stablecoin as a regulated financial product rather than a tool for real-time intervention.
"Circle has a very, very clear performance obligation under the law," Allaire said during a press conference.
"Circle follows the rule of law, and we are able to undertake actions such as freezing a wallet at the direction of law enforcement or the courts," he added.
The CEO argued that decisions to blacklist or freeze funds should follow legal processes instead of company discretion during exploits.
The cost of delayed action
Critics argue that Circle's approach allows stolen assets to move freely. According to CoinDesk, blockchain sleuth ZachXBT claims Circle’s inaction across more and than a dozen cases since 2022 has contributed to over $420 million in illicit funds escaping.
ZachXBT pointed to multiple incidents where stolen USDC remained in identifiable wallets for hours or days. These include exploits affecting Cetus, SwapNet, and Nomad.
The Drift Protocol exploit recently highlighted these delays. The suspected North Korea-linked attack resulted in losses of up to $280 million, with roughly $230 million in USDC moving across chains over several hours.
Tether, the issuer of the USDT stablecoin, maintains a different strategy. CoinDesk reported that Tether has repeatedly frozen funds linked to hacks and illicit activity within hours.
In several cases, such as exploits affecting Ledger and Remitano, Tether blacklisted stolen funds while equivalent USDC remained untouched, according to ZachXBT.
Some industry experts argue that faster, discretionary freezes would undermine decentralized finance (DeFi). They suggest that giving stablecoin issuers the power to intervene at will would grant them too much control over the ecosystem.
Market analysts at William Blair suggest that USDC growth is boosting the outlook for Circle. This growth is also contributing to a "de-risked" status for Coinbase shares following recent selloffs.
