Circle, the issuer of the world’s second-largest stablecoin, is under fire for allegedly doing nothing as more than $230 million in stolen USDC moved through its cross-chain infrastructure.
The funds originated from a $280-285 million exploit of the Drift Protocol on April 1. The hacker breached administrative controls and executed a lightning-fast 12-minute heist using pre-signed transactions.
The stolen USDC was bridged from Solana to Ethereum via Circle’s Cross-Chain Transfer Protocol (CCTP) in over 100 transactions-activity that occurred during regular business hours.
Despite having the ability to freeze USDC in any wallet-a power previously used in over $110 million in freezes-Circle reportedly took no action. Blockchain sleuth ZachXBT noted the inactivity, despite public awareness of the breach in real time.
Critics say the selective use of USDC’s freeze function undermines trust in centralized stablecoins. Industry insiders warn this may accelerate interest in decentralized alternatives like DAI.
The DRIFT token plummeted 98% following the exploit, leaving the protocol’s recovery prospects bleak. Circle has not publicly explained its decision. Regulatory scrutiny of stablecoin issuers is expected to intensify.