Circle’s USDC freeze power faces fresh scrutiny after wallets were blocked while stolen funds moved
Circle's USDC stablecoin is under scrutiny for inconsistent application of its freeze powers, raising concerns about operational risk for businesses.Summary
Circle, the issuer of USDC, is facing criticism regarding its inconsistent use of its ability to freeze funds. An investigation by ZachXBT alleges that Circle was slow to act in 15 cases involving over $420 million in potentially illicit funds since 2022, while simultaneously freezing 16 operational business wallets in a sealed US civil matter. This discrepancy raises questions about the criteria Circle uses for freezing funds and the operational risks businesses face when using USDC. Circle’s legal terms grant it broad discretion, but the recent incident highlights a tension between legal compliance and user continuity. The situation is particularly relevant as the GENIUS Act establishes a regulatory framework for stablecoins, and FATF emphasizes the importance of timely enforcement. The future of USDC depends on whether Circle can demonstrate transparency and speed in its freeze reviews, potentially leading to increased market share or a decline as businesses diversify to other stablecoins.
(Source：CryptoSlate)