On-Chain Analyst Flags USDC’s Role in North Korean Illicit Payments
On-chain investigator ZachXBT has voiced concerns about Circle, the issuer of the USDC stablecoin. He claims Circle’s compliance standards are lacking, especially regarding its use by malicious actors.
ZachXBT alleges that North Korean IT workers are using USDC to move millions in illicit funds. This revelation comes as Circle seeks a national trust bank charter, which would allow it to manage USD coin reserves.
The analyst criticizes Circle for not taking action against these activities.Despite the visibility of these fund flows, Circle has not frozen any wallets involved. “They boast about compliance but do nothing to detect or freeze suspicious activity,” he wrote.
Circle’s handling of the situation has been criticized.Despite the scale of the fund flows, the company has not taken steps to curb the activity. “Circle / USDC is the primary infrastructure used by DPRK IT workers to facilitate payments. They currently do nothing to detect or freeze the activity while boasting about compliance,” ZachXBT noted.
The payments are linked to North Korean cyber actors who gain access to organizations’ infrastructures under false identities. This tactic has been flagged by security experts as a method for stealing funds and data.
ZachXBT identified high eight-figure volumes flowing through these wallets recently, mostly in USDC. This contrasts with Tether and other stablecoin issuers, who have frozen wallets and blocked suspicious fund movements in similar cases.
Circle was previously viewed as the industry’s compliance leader, boasting licenses from major regulators. Though, the reports of allowing sanctioned actors to operate unchecked deal a major blow to its reputation.
Circle’s rival Tether’s USDT has faced criticism for enabling illicit transactions due to its perceived lack of oversight.In contrast, Circle was viewed as the industry’s compliance leader, boasting licenses from major regulators and pushing a cleaner image.
Earlier this year,the firm went public under the same compliance narrative and earned praise for setting a positive regulatory precedent within the industry. However, Circle’s reported failure to take action also contrasts sharply with how tether and other stablecoin issuers have responded in similar cases, freezing wallets and blocking suspicious fund movements.
While the issuer has yet to publicly deny or acknowledge the allegations, the reports of allowing sanctioned actors to operate unchecked deal a major blow to its reputation.crypto.news reached out to Circle for comment but has yet to receive a response as of press time.
