Circle faces backlash over USDC freeze policy

Circle defends its USDC freeze policy after the $280M Drift exploit, insisting it only acts under legal orders. CEO Jeremy Allaire calls private intervention a "moral quandary."

Circle is under fire for refusing to freeze USDC wallets tied to the $280 million Drift DeFi protocol exploit. CEO Jeremy Allaire addressed the criticism at a Seoul press conference, explaining that Circle only freezes wallets when ordered by law enforcement or courts—not in response to public outcry or ongoing hacks. Allaire called the situation a "moral quandary," stressing that private intervention without legal authority could undermine decentralized finance principles and pose significant risks. Critics, including blockchain investigator ZachXBT, have questioned Circle’s consistency, citing past wallet freezes and suggesting quicker action might have stopped illicit fund transfers. Allaire reiterated that Circle’s actions are strictly guided by legal and regulatory requirements, and the company cannot act independently. The controversy underscores the ongoing debate over stablecoin issuers’ responsibilities in exploit responses and the balance between technical capability and legal process.