Circle CEO Jeremy Allaire said the company will not proactively freeze wallet addresses unless it receives a court order or is required by law enforcement. Even amid disputes about hacker money laundering and backlash from the community, Circle still insists on operating in accordance with the rule of law.
Jeremy Allaire Sets Circle’s Law-Enforcement Bottom Line
As the global cryptocurrency market roils, Circle’s CEO Jeremy Allaire, at a press conference in Seoul, South Korea, took a clear stance on the most sensitive market issue: “asset freezes.” He said that while Circle has the technical means to freeze specific wallet addresses, the company will not proactively intervene and freeze $USDC assets unless it receives a court order or formal instructions from law-enforcement agencies.
Jeremy Allaire stressed that $USDC is positioned as a regulated financial product, and its operation must strictly follow the rule of law (Rule of Law).
When a hacker attack occurs, Circle should intervene in accordance with legal procedures. These remarks link Circle’s actions to statutory obligations, establishing a basic principle that, when faced with the flow of illicit funds, companies should prioritize following legal procedures rather than moral discretion.
Operational data shows that in 2026, Circle froze only 122 addresses, most of them in February. Compared with its main competitor Tether ($USDT), which intervenes more aggressively, Circle’s handling appears quite restrained.
Jeremy Allaire believes that stablecoin issuers do not have the authority to dispose of users’ assets arbitrarily outside the legal framework; if such authority is abused, it will harm the integrity of the entire financial system.
He views $USDC as part of the traditional financial system, arguing that asset seizure or blacklist handling should be subject to judicial oversight like bank accounts, following established legal processes. Although the market debates the speed of these legal procedures, Jeremy Allaire insists this is the only way to maintain long-term stability and trust in a regulated stablecoin.
On-chain detectives and the community’s fury! Performance doubts sparked by a $420 million loss
However, this insistence by Circle on “doing things the right way by law” is seen by fast-response on-chain security communities as a protective shield for hacker money laundering. The well-known blockchain sleuth ZachXBT has repeatedly criticized Circle’s handling publicly. He pointed out that since 2022, because Circle failed to take timely action against known hacker addresses, an estimated $420 million in $USDC flowed into illegal industries.
Image source: X/@zachxbt ZachXBT has repeatedly criticized Circle’s handling publicly, accusing Circle of failing to take timely action against known hacker addresses
A recent major case involves the attack on Drift Protocol, which suffered losses as high as $280 million, including $230 million in $USDC that was transferred frequently within a matter of hours. Even though the community had identified the attackers’ wallets within the first time frame, Circle refused to freeze the assets because it had not received a court order. In the end, the hackers used a decentralized exchange (DEX) to convert $USDC into ether ($ETH) and used mixing tools to evade tracking.
Market data analysis also reflects a stark difference in enforcement efficiency between Circle and Tether. To date, $USDC has frozen 602 addresses, while $USDT has cumulatively frozen as many as 2,886 wallets. Analysts warn that Circle’s decision-making process and the long waiting times involved may make $USDC a more attractive target for hackers.
Especially in early 2026, DeFi protocols became a hot spot for attacks. Because these protocols typically lack strict regulation, hackers often take advantage of $USDC ’s high liquidity and widely available lending pools to quickly carry out cross-chain money laundering. Although some people in the community have proposed establishing “exception mechanisms” for hacker attacks, the well-known commentator Nic Carter believes the real solution is to build a digital courtroom (Chancery Court) that can keep up with network speed, in order to counter hackers’ transfer speeds.
Further Reading
DeFi platform Drift gets hacked on April Fools’ Day! Hackers drain $270 million in assets; admin key becomes a vulnerability
Who’s to blame for Drift being hacked? Cross-chain assets not frozen; ZachXBT blasts Circle for incompetence
A conflict between corporate discretion and the foundation of DeFi trust
On the controversy over whether Circle should have the power to freeze instantly, academia and industry experts hold sharply different views. Omid Malekan, an adjunct professor at Columbia Business School, warned that allowing stablecoin issuers to implement arbitrary freezing or confiscation functions outside legal requirements would seriously undermine the foundation of decentralized finance (DeFi).
He believes that if the leadership of a company can arbitrarily cut off the flow of funds based on personal judgment or social opinion, then both “code is law” and “law is law” principles will cease to exist.
Image source: X/@malekanoms Omid Malekan, an adjunct professor at Columbia Business School, warns that allowing a stablecoin issuer to implement arbitrary freezing or confiscation functions outside legal requirements would seriously undermine the foundation of DeFi
In this situation, the personal will of a single company’s leadership would override the law. Such overly concentrated power would cause users to lose trust in the DeFi system, because the security of assets would no longer depend on mathematics and protocols, but rather on the issuer’s administrative decisions.
This view echoes Circle’s core internal strategy: positioning itself as a compliant, institutionalized tool. Circle’s technological architecture allows it to freeze specific addresses quickly, but exercising this power must be highly transparent and constitutional. At present, Circle relies on an ad hoc notification and decision system, avoiding automated AI scanning mechanisms—this is to prevent harming innocent users by mistake.
However, this also leads to multiple cases where Circle blacklists addresses only months after an attack occurs, by which time the illicit funds have already been laundered. This debate reflects a long-standing contradiction in the blockchain industry: how to strike a balance between the pursuit of maximum decentralization trust and the need to protect users’ asset security.
Why sanctioned parties avoid $USDC and turn elsewhere
In addition to hacker attacks, the geopolitical role of $USDC has also attracted significant attention. In response to a recent report by the Financial Times claiming that Iran may require the use of cryptocurrency to pay tolls for passage through the Strait of Hormuz, Jeremy Allaire explicitly denied in the Seoul press conference the possibility of $USDC being used for such purposes. He said this scenario is extremely unlikely because Circle strictly enforces global regulatory standards and sanctions lists.
- Related news: Hormuz Strait is open! Iran demands Bitcoin to pay for tolls; the Persian Gulf remains under “big tanker” traffic
Because $USDC has a highly transparent technological structure and is subject to judicial oversight at any time, for entities or individuals trying to evade sanctions, $USDC is not an ideal choice. Instead, these sanctioned parties usually prefer alternative solutions with lower levels of regulation and worse transparency, or offshore stablecoins.
Jeremy Allaire’s remarks highlight Circle’s determination to walk the path of “traditional financialization.” As $USDC ’s adoption rate keeps increasing, it shows vulnerabilities when facing new types of scams such as Address Poisoning and Dusting.
Even so, Circle firmly believes that only through close cooperation with governments and law-enforcement agencies worldwide can stablecoins gain a foothold in mainstream economies. For Circle, maintaining consistency in the rule of law takes priority over stopping losses in the short term. This stance subjected it to enormous public opinion pressure in 2026, while also making $USDC the digital dollar asset most aligned with compliance requirements in the eyes of institutional investors.
