On-chain sleuth ZachXBT is raising red flags about stablecoin issuer Circle’s compliance practices, warning that its popular USDC stablecoin is increasingly being used by malicious actors including North Korean operatives.
According to ZachXBT, IT workers linked to North Korea have been funneling millions of dollars in illicit payments through USDC. His comments surfaced in response to Circle’s recent filing for a national trust bank charter, which would give the company the authority to manage the reserves backing USD Coin.
The on-chain analyst criticized Circle for allegedly turning a blind eye to suspicious activity, despite the clear visibility of large fund flows on-chain.
“They currently do nothing to detect or freeze the activity while boasting about compliance,” ZachXBT wrote on social media, adding that he’s tracked high eight-figure sums moving through wallets associated with North Korean actors.
These payments reportedly tie back to North Korean cyber operatives who secure remote tech jobs under fake identities. Once embedded in organizations, they gain access to sensitive infrastructure a tactic security experts have highlighted as an evolving method for both financial theft and intelligence gathering.
Historically, Circle’s chief competitor, Tether’s USDT, has faced the brunt of criticism for enabling illicit transactions, largely due to its perceived lack of transparency and oversight. In contrast, Circle has long presented itself as the compliance leader in the stablecoin space, earning licenses from major regulators and maintaining a cleaner reputation.
Earlier this year, Circle went public under this same compliance narrative, drawing praise for setting a high regulatory standard within the crypto industry. However, these fresh allegations mark a stark contrast, especially given that other stablecoin issuers like Tether have, in some instances, frozen wallets and blocked suspicious transactions when similar issues have arisen.
So far, Circle has neither confirmed nor denied the allegations publicly. Still, reports suggesting that sanctioned actors might be exploiting USDC without any intervention could seriously undermine the company’s reputation as a compliance-first organization.
