Jeremy Allaire, director of the Circle company, made a statement at a corporate event about the criticism that has become more frequent lately. In the digital money market, allegations that USDC does not intervene quickly enough in illegal transfers stand out.
Legal framework emphasis from Circle
US-based stablecoin issuer Circle currently manages the ecosystem’s second largest dollar-based stablecoin with a USDC supply of over $50 billion. The company’s CEO, Jeremy Allaire, stated at a press conference held in Seoul that Circle only takes steps to block transactions or freeze addresses if there is an official legal basis.
According to Allaire, Circle’s ability to act is limited by financial regulations and legal processes; He stated that they did not unilaterally freeze any wallet without a court order or request from law enforcement agencies.
Circle has a very clear responsibility under the law. We can freeze wallets if there is a directive from law enforcement or the court.
It was pointed out that USDC is an asset embedded in the financial system, and it was stated that the company will not intervene on its own initiative in case of sudden abuse, attack or hacking. This approach of the company is shaped as a strategy that emphasizes closer cooperation with corporate regulators.
Industry reaction and comparisons
Despite Circle’s policy, it is known in the industry that Tether follows a faster and proactive path for USDT. In recent years, Tether has frozen wallets within hours against hacking and illegal fund transfers and acted quickly in solving many cases. Particularly in the events that took place on platforms such as Ledger and Remitano, Tether quickly blacklisted funds worth millions of dollars; During the same period, it was claimed that USDC tokens remained untapped.
In recent weeks, the debate has grown with the social media posts of blockchain researcher ZachXBT. ZachXBT alleged that a total of over $420 million in illicit funds moved in at least twelve separate USDC-related incidents over the past two years and were not immediately dealt with. For example, in the attack on Drift Protocol, thought to be linked to North Korea, $230 million worth of USDC was moved cross-chain.
Similarly, USDC balances stolen in attacks against SwapNet, Cetus and Nomad remained unfrozen for a long time. This situation was interpreted by some followers as the company was slow to intervene despite its technical talent.
In response to these criticisms, Omid Malekan, a visiting professor at Columbia Business School, argued that rapid intervention creates other risks. Malekan stated that arbitrary freezing or seizures that go beyond the legal framework could harm the principles of decentralized finance (DeFi).
If Circle and other stablecoin companies start doing more than the law requires, not only will the principle of ‘code is law’ disappear; At the same time, the law ceases to be a law and the decisions are left to the initiative of a single company.
According to Malekan, unauthorized interventions can seriously damage user trust and damage the decentralized structure of the system.
