Blockchain investigator ZachXBT has accused Circle of profiting from transactions linked to the infamous North Korean hacking group, the Lazarus Group, a serious claim against the company.
This allegation follows an incident where Circle delayed blacklisting funds associated with the group by over four months—significantly longer than other leading stablecoin issuers.
ZachXBT took to social media to express his frustration, highlighting Circle’s overall ineffectiveness in combating money laundering.
He stated:
“You have never blacklisted after a DeFi exploit/hack when there was sufficient time, yet you continue to profit from these transactions.”
The Lazarus Group Hack
The Lazarus Group has also been identified as the perpetrator behind the recent hack of the Indonesian crypto exchange Indodax, which took place on September 11. This incident has resulted in the theft of over $20 million from the exchange, forcing it to temporarily halt operations to assess the damage.
Fuck Circle Fuck @jerallaire you are solely focused on extracting from the ecosystem.
Not once have you ever blacklisted after a DeFi exploit/hack when there was ample time while you continue to profit off the transactions.
You took 4.5 months longer than every… https://t.co/9TFn11UERU
— ZachXBT (@zachxbt) September 14, 2024
Following a thorough investigation, Indodax has cautiously reopened itself to customers, gradually restoring deposit and withdrawal services, including staking functionalities.
ZachXBT has reported that four stablecoin issuers—Tether, Circle, Paxos, and Techteryx—have blacklisted two addresses linked to the Lazarus Group, which collectively hold nearly $4.96 million in different stablecoins.
Source: ZachXBT
In addition to the frozen blacklisted funds, exchanges have also frozen another $1.65 million belonging to the hackers. This brings the total frozen amount to approximately $6.98 million. Ongoing investigations indicate a concerning trend, showing that stablecoins are being utilized to launder stolen assets.
Evidence suggests that the Lazarus Group has successfully laundered around $200 million from various crypto exploits into stablecoins such as USDT and USDC from 2020 to 2023.
Circle’s Delayed Response
The claims from ZachXBT have ignited significant backlash against Circle, particularly towards its CEO, Jeremy Allaire. Critics argue that Circle has shown little regard for the integrity of the cryptocurrency ecosystem, prioritizing profit instead.
“They publicly act as if they are a compliant stablecoin meant to safeguard the ecosystem, but that’s not entirely true,” ZachXBT pointed out. He noted that, despite having a large workforce, Circle lacks an incident response team equipped to tackle issues stemming from DeFi hacks or exploits.
This scrutiny comes at a crucial moment when discussions surrounding stablecoin regulation and anti-money laundering initiatives are intensifying. The crypto community is increasingly anxious about stablecoins, especially in relation to state-sponsored hacking groups like Lazarus.
The Bigger Picture
The Lazarus Group is believed to have stolen $3 billion from the digital currency sector through numerous high-profile attacks. These stolen funds may potentially support the North Korean regime-backed hacking organization’s weapon development initiatives.
Featured image from Pexels, chart from TradingView
