Circle Faces Backlash for Slow Response in $5 Million Lazarus Group Fund Freeze

Stablecoin issuers froze nearly $5 million held by the notorious North Korean Lazarus Group after investigators traced the funds.

Blockchain investigator ZachXBT revealed this development in an X post on September 14.

Lazarus Group Hit by $5 Million in Stablecoin Freeze

ZachXBT reported that stablecoin issuers Tether, Circle, Paxos, and Techteryx blacklisted two addresses containing $4.96 million in assets. However, these wallets still hold $720,000 in DAI and $313,000 in Ethereum, which remain unfrozen.

These funds are linked to a broader investigation ZachXBT conducted in April. His findings suggest that the Lazarus Group laundered over $200 million from 25 crypto-related hacks between 2020 and 2023.

ZachXBT noted that $6.98 million had been frozen from these investigations, including $1.65 million held across multiple exchanges. He did not disclose which exchanges are involved.

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Lazarus Group Blacklisted Stablecoin Holding. Source: X/ZachXBT

Meanwhile, ZachXBT criticized Circle, the issuer of USDC, for its delayed action in blocking the funds. He argued that Circle and its CEO Jeremy Allaire have shown little concern for the crypto ecosystem, focusing instead on profiting from it.

The blockchain investigator claimed Circle took more than 4 months longer than other major stablecoin issuers to blacklist the Lazarus Group’s funds. He expressed frustration with the company’s inaction, noting that Circle did little to prevent money laundering through its platform.

“In public they pretend to be the compliant stablecoin helping protect the ecosystem when in reality it is not exactly true,” ZachXBT stated.

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He also accused the company of “virtue signaling,” pointing out that despite having over 1,000 employees, Circle lacks an incident response team to block funds after DeFi hacks or exploits.

Investigators have linked the Lazarus Group to several major crypto hacks, including the recent $20 million exploit of the Indodax exchange. Reports suggest the group has siphoned around $3 billion from the cryptocurrency industry over the years. Authorities suspect North Korea uses these stolen funds to finance its weapons program.

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