Gushiken Yona
A lone blockchain investigator has ignited a firestorm in the crypto world by accusing stablecoin giant Circle of dragging its feet in freezing funds stolen by North Korean hackers Lazarus Group, raising questions about corporate responsibility and the effectiveness of blacklisting in the fight against cybercrime.
ZachXBT, a prominent on-chain sleuth known for exposing crypto scams and illicit activities, publicly lambasted Circle and its CEO, Jeremy Allaire, on X. “@jerallaire you do not care at all about the ecosystem except extracting from it,” ZachXBT wrote in a scathing tweet. “Not once have you ever blacklisted after a DeFi exploit / hack when there was ample time while you continue to profit off the transactions.”
The investigator’s accusations stemmed from Circle’s delayed response in blacklisting addresses associated with the Lazarus Group, a North Korean hacking syndicate notorious for its involvement in major cryptocurrency heists. ZachXBT claimed that Circle took 4.5 months longer than other major stablecoin issuers to blacklist the Lazarus Group funds. “You took 4.5 months longer than every other major issuer to blacklist Lazarus Group funds,” he tweeted. “So tired of your virtue signaling when you are the problem.”
Circle eventually blacklisted the addresses on September 14, freezing over $1.5 million worth of its USD Coin (USDC). This action followed similar moves by other stablecoin issuers, including Tether, Paxos, and Techteryx, which collectively froze nearly $5 million across two Lazarus Group-linked addresses.
ZachXBT’s initial investigation, published on April 29, revealed that the Lazarus Group had laundered over $200 million from 25 separate cryptocurrency hacks between 2020 and 2023. The $5 million blacklisted represents a small fraction of the total stolen funds but highlights the growing role of stablecoins in facilitating money laundering and the challenges in combating it.
1/ How Lazarus Group laundered $200M from 25+ crypto hacks to fiat from 2020 – 2023https://t.co/s8zNFwlamb
— ZachXBT (@zachxbt) April 29, 2024
When questioned about Circle’s delayed response, ZachXBT responded, “in public they pretend to be the compliant stablecoin helping protect the ecosystem when in reality it is not exactly true.” This statement underscores the growing skepticism within the crypto community regarding the commitment of some centralized entities to security and transparency.
The incident has sparked a broader debate about the effectiveness of blacklisting as a tool to combat cybercrime in the decentralized world of cryptocurrency. While freezing stolen funds can disrupt the activities of criminal organizations, it also raises concerns about censorship and the potential for abuse of power by centralized entities.
The $5 million blacklisted represents a minuscule portion of the entire stablecoin market, which currently stands at $172.4 billion, according to CoinGecko data. However, the incident serves as a stark reminder of the vulnerabilities within the cryptocurrency ecosystem and the need for greater vigilance and cooperation between industry players and law enforcement agencies to combat the growing threat of cybercrime.
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Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
