Circle may refuse to freeze USDC without a court order, Jeremy Allaire states

Circle’s CEO, Jeremy Allaire, warned that USDC will not be frozen outside legal cases. The decision comes amid warnings that Circle could be more active in preventing hacking losses. 

Circle will not freeze USDC without a court order, stated CEO Jeremy Allaire at a press conference in Seoul, South Korea. Circle still aims to remain among the most influential stablecoin issuers, but its position has exposed it to potential responsibility in the case of hacks. 

Since USDC is highly liquid and distributed in multiple pairs and lending vaults, it is often withdrawn in attacks and exploits. 

Circle has previously frozen multiple wallets, but only after a court order, as in the case of LIBRA tokens. Freezing or holding USDC now depends on specialized protocols that block withdrawals under their internal rules or smart contracts. 

Circle left Drift Protocol hack and swaps to continue

The news that USDC was freezeable sparked mixed reactions in the crypto community. Overall, the ability to claw back funds from hacks was seen as a positive development. Even censorship-free USDT tokens applied limited freezes. 

In the case of Drift Protocol, some of the exploit addresses were identified within the first hours of the hack, but Circle did nothing to freeze the funds. Immediate swaps through DeFi allowed the exploiter to disguise some of the funds. 

The Drift Protocol exploiter began spending portions of the available USDC to buy ETH, which could then be mixed to make tracing nearly impossible. 

Token freezes slowed down in 2026

Compared to previous years, token freezes declined in 2025 and early 2026. In the past quarter, most attacks targeted DeFi protocols, which operate under much weaker oversight. 

In some Web3 cases, Circle only blacklisted and froze addresses months after the exploit, after the funds were moved and laundered. 

To date, USDC has frozen only 602 addresses, totaling 2,886 wallets for Tether’s USDT. In 2026, Circle froze 122 addresses, with 109 in February alone. Analysts noted that Circle’s indecision and long wait times may make USDC even more appealing to hackers. 

The solution to Circle refusing to freeze funds for anything other than a court order is not to carve out a bunch of exceptions, it’s to create a Chancery court that moves at the speed of the internet

— nic carter (@nic_carter) April 13, 2026

Scanning for suspicious addresses is not automated or facilitated by AI; it depends on ad hoc systems for notification and decision-making. As a result, researcher ZachXBT noted crypto has lost up to $420M in USDC since 2022 for failing to act when directed to known exploit addresses. 

USDC is not only stolen in major hacks. As more wallets adopt the stablecoin, they also become victims of address poisoning and dusting. USDC is among the tokens most often targeted for exploits due to its high adoption rate and liquidity through both DeFi and centralized exchanges.

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