Circle accused of ‘mining’ from Lazarus Group hacks faces criticism from ZachXBT

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Circle, the company behind the USDC stablecoin, is facing criticism from blockchain investigator ZachXBT for its delayed response to the blacklisting of funds associated with North Korean hacking group Lazarus.

ZachXBT claims Circle took four months longer than other major stablecoin issuers to blacklist addresses linked to the Lazarus Group. The investigator alleges that this delay allowed Circle to profit from transactions associated with the notorious hacking group, which has been involved in numerous cryptocurrency thefts.

The allegations came in the wake of a recent attack on Indonesian cryptocurrency exchange Indodax attributed to the Lazarus Group. The 9/11 attack led to the theft of more than $20 million, forcing the exchange to temporarily suspend operations.

Investigations reveal a disturbing trend of using stablecoins to launder stolen funds. Evidence suggests that the Lazarus Group was able to launder approximately $200 million from various crypto holdings in stablecoins, including USDT and USDC, between 2020 and 2023. This has raised concerns about the role of stablecoins in facilitating illicit activities and the responsibilities of issuers in preventing such use. .

ZachXBT’s criticism extends beyond the recent incident, alleging a systemic failure by Circle to act promptly in cases of DeFi exploits and hacks. The investigator claims that despite having a large staff, Circle does not have an incident response team to deal with issues arising from DeFi hacks or exploits. The allegations come amid intensifying discussions about stablecoin regulation and efforts to combat money laundering in the crypto space.

Major stablecoin issuers blacklist linked addresses

Recent updates from ZachXBT indicate that all four major stablecoin issuers – Paxos, Tether, Techteryx and Circle – have now blacklisted two specific addresses associated with the Lazarus Group, freezing a total of $4.96 million. The addresses, 0x36f2D3871edd59d5C06DB8F0b12bE928d5922A70 and 0x12ED7f6ed0491678764c2b222A58452926E44DB6, held various stablecoins, including TUSDT, and USDC.

According to the data provided, Circle was the latest to act, blacklisting USDC funds on September 14, 2024, nearly five months after other issuers took similar action. Additionally, $1.65 million was frozen at various exchanges, bringing the total amount frozen as a result of the investigation to $6.98 million.

Chain Detective has had a number of high-profile investigations, including exposing Martin Shkreli as the creator of TrumpCoin and linking a GCR account hack to a Solana meme coin team, among others.

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