Circle CEO defends USDC freeze policy as criticism grows after Drift exploit

Circle Internet CEO Jeremy Allaire offered his clearest defense yet of the company’s $USDC freeze policy, saying the issuer does not block wallets unless there is a formal legal basis to act.

Speaking in Seoul, Allaire said Circle treats $USDC as a regulated financial product inside the rule of law, not as a tool for ad hoc intervention whenever stolen funds begin moving onchain. The remarks mark the company’s strongest public response so far to criticism that it failed to act quickly during the recent Drift Protocol exploit.

Allaire said Circle has a clear legal obligation to act only when directed by courts or law enforcement. He described $USDC as part of the regulated financial system rather than a tool for discretionary intervention during fast moving exploits, reinforcing the company’s position that freeze decisions must follow formal legal process rather than public pressure.

Last week, Circle said it freezes $USDC only under legal compulsion and used the controversy to urge Congress to advance the GENIUS Act and CLARITY Act, arguing that stablecoin issuers need a clearer legal framework for when and how they can intervene.

The criticism intensified after Drift Protocol was drained on April 1 in what Chainalysis and TRM Labs described as a highly coordinated exploit likely linked to North Korean actors. The attack resulted in losses of about $285 million, with roughly $230 million in $USDC among the stolen funds.

Analysts said the attacker moved the $USDC across chains over several hours, creating a window in which critics argued Circle could have frozen the assets before they were laundered further.

Onchain investigator ZachXBT has argued that Circle’s reluctance to freeze wallets in real time has contributed to more than $420 million in illicit $USDC flows escaping since 2022, citing multiple incidents in which stolen funds remained in visible wallets for hours or days without intervention.