According to blockchain researcher ZachXBT, Circle was making money from transactions aligned with the notorious North Korean hacking group Lazarus Group, a serious accusation leveled against the company.
This claim comes after an incident that occurred circle It took more than four months to delay the blacklisting of funds linked to the group — longer than other major stablecoin issuers.
ZachXBT took to social media to express his displeasure by drawing attention to Circle’s overall failure in its fight against money laundering.
He said:
“You never get blacklisted after a DeFi exploit/hack when you have plenty of time, while still profiting from transactions.”
Lazarus Group Hack
The Lazarus Group was also blamed for the recent hack of Indonesian cryptocurrency exchange Indodax, which occurred on September 11. The hack resulted in the theft of over $20 million from the exchange, which led to its temporary shutdown to assess the damage.
damn circle damn circle @jerallaire You don’t care at all about the ecosystem except for extracting from it.
You were never blacklisted after exploiting or hacking DeFi when you had plenty of time to continue profiting from transactions.
It took 4.5 months longer than any… https://t.co/9TFn11UERU
— ZachXBT (@zachxbt) September 14, 2024
Once the investigation was complete, Indodax opened itself up to more services, gradually resuming deposit and withdrawal services, as well as storage services.
ZachXBT reports that four stablecoin issuers, including Tether, Circle, Paxos, and Techteryx, have blacklisted two addresses linked to the Lazarus Group, which holds a total of $4.96 million in various stablecoins.
Source: ZachXBT
Apart from the frozen funds blacklisted, the exchanges have already frozen another $1.65 million belonging to the hackers. This means that the total frozen funds now stand at around $6.98 million. So far, the ongoing investigation shows a worrying trend: stablecoins are being used to launder stolen funds.
There is evidence that the Lazarus Group was able to launder around $200 million from various cryptocurrency exploits into stablecoins including USDT and USDC between 2020 and 2023.
delayed circuit response
ZachXBT’s accusations have sparked a storm of criticism against Circle, and particularly against its CEO Jeremy Allaire. Critics say the company has not cared about the health of the crypto ecosystem, and that profit seems to be taking up more space in the company’s vocabulary.
“They publicly pretend to be a compliant stablecoin that aims to help protect the ecosystem, but that’s not entirely true in reality,” ZachXBT commented, noting that Circle, which has a large staff, lacks an incident response team to deal with DeFi hacks or exploits.
The criticism comes at a time of growing debate over stablecoin regulation and anti-money laundering efforts. The crypto world is increasingly concerned about stablecoins when they are linked to state-sponsored hacking groups like Lazarus.
The bigger picture
The Lazarus Group is alleged to have stolen $3 billion from the cryptocurrency industry in several high-profile attacks. The stolen funds may have been used to fund weapons development for the North Korean regime-backed hacking organization.
Featured image by Pexels, chart by TradingView
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