A serious accusation has been leveled against Circle, a major stablecoin issuer. Blockchain investigator ZachXBT claims that Circle has been profiting from transactions linked to the notorious North Korean hacking group, Lazarus Group.
Circle’s Slow Response
ZachXBT points out that Circle took over four months to blacklist funds associated with the Lazarus Group, significantly longer than other major stablecoin issuers. This delay, according to ZachXBT, highlights Circle’s lack of commitment to fighting money laundering. He criticizes Circle for not blacklisting funds after DeFi exploits and hacks, even when there was ample time to do so.
Lazarus Group’s Recent Hack
The Lazarus Group is suspected of being behind the recent hack of Indonesian crypto exchange Indodax, which resulted in the theft of over $20 million. This incident led to Indodax temporarily shutting down to assess the damage.
Frozen Funds and Laundering
While Circle, along with other stablecoin issuers like Tether, Paxos, and Techteryx, have frozen a combined $6.98 million in funds linked to the Lazarus Group, there is evidence that the hackers have laundered around $200 million through stablecoins like USDT and USDC between 2020 and 2023.
Criticism and Concerns
ZachXBT’s accusations have sparked outrage against Circle, particularly towards its CEO, Jeremy Allaire. Critics argue that Circle prioritizes profits over the integrity of the crypto ecosystem. They highlight the lack of an incident response team at Circle, despite its large staff, to address DeFi hack-related issues.
This controversy comes at a time when stablecoin regulation and anti-money laundering efforts are gaining momentum. The crypto community is increasingly concerned about the potential for stablecoins to be used by state-sponsored hacking groups like Lazarus.
The Bigger Picture
The Lazarus Group is believed to have stolen over $3 billion from the crypto industry through various attacks. These stolen funds are suspected to be used to finance North Korea’s weapons development program.
