Circle CEO Defends Company’s Response to Stablecoin Hacks

During a press conference in Seoul, Jeremy Allaire said the stablecoin issuer does not freeze wallets unless it has a formal legal basis, CoinDesk reported Monday (April 13). He characterized Circle’s USDC, the second-biggest dollar-pegged stablecoin, as a regulated financial product and not a tool for real-time intervention, the report added.

“Circle has a very, very clear performance obligation under the law,” Allaire said. “Circle follows the rule of law, and we are able to undertake actions such as freezing a wallet at the direction of law enforcement or the courts.”

Allaire positioned USDC as part of the traditional financial system, and thus subject to oversight. He suggested that the decision to freeze funds should not be made at the discretion of cryptocurrency companies suffering an exploit, but should rather come after court orders or requests from law enforcement.

CoinDesk noted that rival Tether—which issues the largest stablecoin, USDT—takes a more proactive tactic, repeatedly freezing funds connected to hacks and illegal activity within hours.

The CEO’s remarks, the report added, come at a moment when Circle is facing increased scrutiny. Earlier this month, Drift Protocol was hit with a suspected North Korea-linked exploit that led to losses of up to $280 million, with around $230 million in USDC moving across chains over several hours.

This incident, CoinDesk said, has been cited by critics who maintain that Circle failed to respond even though it had the technical ability to do so. An earlier report by CoinDesk on the incident cited other viewpoints, which argued that Circle could face legal risk if it were to freeze funds without a court order or law enforcement request.

In other stablecoin news, PYMNTS wrote last week about new Federal Reserve research, which showed that most of these assets are not flowing through the real economy. Rather, they are sitting idle or circulating within crypto markets, but not being used to pay for goods and services.

The Fed’s findings reinforce those of PYMNTS Intelligence from its March data book, “Stablecoins Gain Ground: Why CFOs See More Promise There Than in Crypto,” which showed interest among executives exceeding actual deployment.

According to that report, more than four in 10 middle market firms say they have at least discussed or tested stablecoins, while just 13% report actual use.

“The gap between awareness and implementation underscores a persistent hesitation among finance leaders,” PYMNTS wrote. “Stablecoins are regarded as potentially useful, but not yet embedded in standard financial operations.”