Circle CEO Jeremy Allaire said the company will not proactively freeze wallet addresses unless it receives a court order or a requirement from law enforcement. Even amid controversies over hacker money laundering and backlash from the community, Circle still insists on operating under the rule of law.
Jeremy Allaire Sets Circle’s Law-Enforcement Bottom Line
As the global crypto market swirls with activity, Circle’s CEO Jeremy Allaire, speaking at a press conference in Seoul, South Korea, took a clear stance on the market’s most sensitive issue: “asset freezes.” He noted that while Circle has the technical means to freeze specific wallet addresses, it will not proactively intervene and freeze $USDC assets unless it receives a court order or an official directive from law enforcement.
Jeremy Allaire stressed that $USDC is positioned as a regulated financial product, and its operation must strictly comply with the rule of law (Rule of Law).
When a hacker attack occurs, Circle should carry out intervention according to legal procedures. These remarks tie Circle’s actions to statutory obligations, establishing the company’s basic principle: when faced with the flow of illegal funds, it should prioritize legal procedures over moral discretion.
Operational data available shows that in 2026, Circle froze only 122 addresses, most of them concentrated in February. Compared with its main competitor Tether ($USDT), which is more aggressive in intervention, Circle’s approach looks quite restrained.
Jeremy Allaire believes that stablecoin issuers do not have the authority to dispose of users’ assets arbitrarily outside the legal framework. If that power is abused, it will harm the integrity of the entire financial system.
He views $USDC as part of the traditional financial system and believes that seizing assets or handling them as part of a blacklist should follow established legal processes, just as bank accounts are governed by judicial oversight. Although the market disputes the speed of such legal processes, Jeremy Allaire maintains that this is the only way to maintain the long-term stability and trust of a regulated stablecoin.
On-chain sleuths and community fury! Efficiency questions sparked by $420 million in losses
However, Circle’s insistence on “doing things by the book” is seen by fast-responding on-chain security communities as a protective umbrella for hacker money laundering. The well-known blockchain investigator ZachXBT has repeatedly criticized Circle’s handling publicly. He said that since 2022, because Circle failed to take timely action against known hacker addresses, an estimated roughly $420 million in $USDC has flowed into illegal industries.
Source image: X/@zachxbt ZachXBT has repeatedly criticized Circle’s handling, accusing Circle of failing to take timely action against known hacker addresses
A recent major case involved an attack on Drift Protocol, which suffered losses as high as $280 million, including $230 million in $USDC that was moved repeatedly within hours. Even though the community locked onto the attacker’s wallet at the first moment, Circle refused to freeze the assets because it had not received a court order. In the end, the hacker converted $USDC into Ether ($ETH) through a decentralized exchange (DEX) and used mixing tools to evade tracking.
Market data analysis also reflects a stark difference in law-enforcement efficiency between Circle and Tether. As of now, $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 lengthy waiting time may make $USDC a more attractive target for hackers.
Especially in early 2026, DeFi protocols became a prime target for attacks. Since these protocols typically lack strict regulation, hackers often take advantage of $USDC ’s high liquidity and broad lending pools to quickly perform cross-chain money laundering. Although some in the community have suggested building “exception mechanisms” for hacker attacks, the well-known commentator Nic Carter believes the real solution is to establish a digital court (Chancery Court) that can keep up with network speed to counter hackers’ transfer speed.
Further reading
DeFi platform Drift hacked on April Fool’s Day! Hackers drained $270 million in assets; the admin’s key was the loophole
Whose fault was it that Drift got hacked? Hackers moved cross-chain assets without freezing them; ZachXBT blasts Circle for negligence
The conflict between corporate discretion and the trust foundation of DeFi
Regarding the controversy over whether Circle should have the power to freeze immediately, both academia and industry experts hold sharply different views. Omid Malekan, an adjunct professor at Columbia Business School, warned that if stablecoin issuers are allowed to carry out arbitrary freezing or seizure functions outside legal requirements, it would severely undermine the foundation of decentralized finance (DeFi).
He believes that if a company’s executives can arbitrarily cut off the flow of funds based on personal judgment or public opinion, then both the principle of “code is law” and the principle of “law is law” would cease to exist.
Source image: X/@malekanoms Adjunct professor at Columbia Business School Omid Malekan warns that if stablecoin issuers are allowed to carry out arbitrary freezing or seizure functions outside legal requirements, it would severely undermine DeFi’s foundation
In this situation, the personal will of a single corporate executive would stand above 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 on the issuer’s administrative decisions.
This view echoes Circle’s core internal strategy: positioning itself as a compliant, institutionalized tool. Circle’s technical architecture allows it to freeze specific addresses quickly, but exercising this power must come with a high degree of transparency and constitutionality. 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 results in multiple cases where Circle blacklists addresses only months after an attack occurs, by which time the illegal funds have already been laundered. This debate reflects a long-standing contradiction in the blockchain industry: how to strike a balance between the trust of maximum decentralization and the need to protect users’ assets’ security.
Why sanctioned parties avoid $USDC and turn elsewhere
Beyond hacker attacks, the geopolitical role of $USDC has also drawn significant attention. In response to a recent report by the Financial Times that claimed Iran might require the use of cryptocurrencies to pay tolls through the Strait of Hormuz, Jeremy Allaire, at the Seoul press conference, explicitly denied the possibility that $USDC could be used for such purposes. He said this scenario is highly unlikely because Circle strictly enforces global regulatory standards and sanctions lists.
- Related news: The Strait of Hormuz is open! Iran asks to pay tolls with Bitcoin, and the Persian Gulf remains “full of supertankers””
Because $USDC has a highly transparent technical 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 options with lower regulatory scrutiny and poorer transparency, or offshore stablecoins.
Jeremy Allaire’s remarks highlight Circle’s determination to go down the path of “traditional financialization.” As the adoption rate of $USDC keeps increasing, it has shown vulnerabilities when facing new 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 secure a place in mainstream economic systems. For Circle, maintaining consistency with the rule of law takes priority over stopping short-term losses. 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.
