ZachXBT, a blockchain investigator, has accused Circle of profiting from transactions that were in alignment with the notorious North Korean cybercrime group Lazarus Group. This is a serious charge against the company.
This allegation is the result of an incident in which Circle delayed the blacklisting of funds associated with the group for over four months, a period that was more than twice as long as that of other main stablecoin issuers.
ZachXBT utilized social media to express his resentment by highlighting Circle’s platform-wide failure in their efforts to combat money laundering.
The Lazarus roup was also allegedly responsible for the recent breach of the Indonesian crypto exchange Indodax, which took place on September 11. The robbery of more than $20 million from this exchange has necessitated its temporary closure in order to evaluate the extent of the damage.
Indodax progressively resumed deposit and withdrawal services, as well as staking services, after conducting a thorough investigation.
Tether, Circle, Paxos, and Techteryx, four stablecoin issuers, have blacklisted two addresses associated with the Lazarus Group. These addresses contain a combined $4.96 million in various stablecoins, according to ZachXBT.
In addition to the designated funds that have been blocked, the exchanges have already frozen an additional $1.65 million that belongs to the hackers.
Consequently, this implies that the aggregate sum of suspended funds is currently approximately $6.98 million. The ongoing investigation has revealed a concerning trend: the used of stablecoins to launder stolen funds.
There is evidence that Lazarus Group was able to launder approximately $200 million from a variety of crypto exploits into stablecoins, such as USDT and USDC, between 2020 and 2023.
ZachXBT’s allegations caused a public uproar against Circle, with a particular emphasis on its CEO, Jeremy Allaire. Critics of Circle contend that the company has shown little regard for the integrity of the crypto ecosystem and that profit appears to be dominating the company’s vocabulary.
“They publicly pose that it is the compliant stablecoin intended to safeguard the ecosystem, but this is not entirely accurate,” ZachXBT commented. He observed that Circle, despite its substantial workforce, does not have an incident response team to address DeFi attack or exploit-generated issues.
The escalation of discussions regarding stablecoin regulation and anti-money laundering initiatives coincides with this criticism. The crypto space is becoming increasingly concerned about stablecoins as they establish connections with state-sponsored cybercrime organizations, such as Lazarus.
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