Stablecoin issuer Circle has come under fire from blockchain investigator ZachXBT for its sluggish response to the $285 million hack of the Drift protocol. The attack resulted in massive losses, leading critics to argue that Circle could have significantly mitigated the damage had it taken more decisive action to freeze the stolen assets.
In his investigation, ZachXBT pointed out that Circle has been consistently slow to respond to cases involving over $420 million in "illicit funds." This accusation has thrust Circle’s asset risk management protocols into the spotlight.
The Tug-of-War Between Legal Compliance and Asset Security
While the public has expressed frustration over the speed of Circle’s freeze operations, industry experts note that the company is constrained by complex legal requirements. According to a report by CoinDesk, freezing user assets without explicit legal authorization carries significant legal risk. For Circle, the challenge lies in balancing the fight against financial crime with the necessity of adhering to strict compliance procedures.
Currently, there are conflicting figures regarding the total volume of illicit funds handled by Circle. While ZachXBT cites a figure as high as $420 million, the Drift hack at the center of this controversy involves $285 million. Circle has yet to issue a public statement regarding its specific freezing protocols or its response time to this particular incident.
