Circle Refuses to Freeze ₱16.17 billion ($270 million) in Stolen USDC

After the April 1 Drift exploit, attackers routed ₱13.9 billion ($232 million) in USDC from Solana to Ethereum using Circle's Cross-Chain Transfer Protocol. Circle published a formal response on April 10 defending its refusal to freeze the stolen funds.

Circle said USDC freezes occur only when the law requires action, and that it is legally compelled by an appropriate authority through a lawful process. The company argued that arbitrary freezes set dangerous precedents for lawful users, and that its freeze power is a compliance obligation constrained by lawful process.

The stance puts Circle at odds with Tether, which froze 3.29 million USDT tied to the Rhea Finance attacker. Tether CEO Paolo Ardoino posted that the freeze proved Tether cares, a direct jab at Circle's hands-off approach.

Tether's terms authorize the company to freeze tokens as required by law or whenever it determines, in its sole discretion, that doing so is prudent. Circle's USDC terms state that transfers are irreversible and the company carries no obligation to track or determine provenance of balances, though it reserves the right to block certain addresses when it believes they may be tied to illegal activity.

OFW families move dollars home through crypto rails to avoid bank fees, relying on both stablecoins for remittances. USDT dominates peer-to-peer exchanges in the Philippines for this use case, where Circle's position means USDC offers less protection against theft but more predictability for lawful holders.

Tether has frozen ₱251.61 billion ($4.2 billion) in USDT due to links to illicit activity since February 2024, with ₱209.67 billion ($3.5 billion) of that total from 2023 onwards.