As an analyst with over two decades of experience in the financial industry, I find these allegations against Circle deeply concerning. The accusation that they have profited from transactions linked to the notorious North Korean hacking group Lazarus is a severe blow to their reputation and trust within the crypto community.
Based on findings by blockchain analyst ZachXBT, it is alleged that Circle has been earning funds from transactions linked to the infamous North Korean hacking group known as Lazarus Group. This allegation is quite serious and could potentially tarnish the reputation of the company.
The claim arises following an instance where Circle postponed the blacklisting of funds linked to the group for over four months, significantly exceeding the timeframe taken by other prominent stablecoin providers.
ZachXBT expressed his frustration on social media, highlighting the widespread issue of Circle’s platform ineffectiveness in combating money laundering.
He said:
“Not once have you ever blacklisted after a DeFi exploit/hack when there was ample time, while you continue to profit off the transactions.”
The Lazarus Group Hack
As a researcher delving into cybersecurity incidents, I’ve come across findings that implicate the Lazarus Group in the recent heist on Indodax, a prominent Indonesian crypto exchange. This incident unfolded on September 11, resulting in a staggering loss of approximately $20 million. Consequently, the exchange had to temporarily halt operations to evaluate and address the damage inflicted.
Fuck Circle Fuck @jerallaire you do not care at all about the ecosystem except extracting from it.
You’ve never been blocked following a Decentralized Finance (DeFi) incident or hack, even when there was sufficient opportunity to do so, yet you persist in reaping profits from the transactions.
You took 4.5 months longer than every…
— ZachXBT (@zachxbt) September 14, 2024
Upon thorough examination, Indodax expanded its offerings, eventually reinstating deposit and withdrawal options, along with staking services.
As an analyst, I’ve just come across a fascinating piece of news: ZachXBT has revealed that four major stablecoin issuers – Tether, Circle, Paxos, and Techteryx – have blocked two specific addresses linked to the Lazarus Group, collectively holding approximately $4.96 million in various stablecoins.
In addition to the previously held funds that were frozen, hackers’ additional $1.65 million has been frozen by the exchanges. This brings the total amount of frozen funds up to approximately $6.98 million. The ongoing investigation suggests a concerning pattern: stablecoins are being used to wash the ill-gotten gains.
It appears that the Lazarus Group successfully laundered approximately $200 million, stemming from multiple cryptocurrency thefts, into stablecoins such as USDT and USDC over the period spanning from 2020 to 2023.
Circle’s Delayed Response
Criticism towards Circle and its CEO, Jeremy Allaire, has ignited intensely due to ZachXBT’s allegations. The company is being accused of prioritizing profits over maintaining the integrity of the crypto ecosystem. It appears that profit matters are dominating more in Circle’s conversations.
According to ZachXBT, they may appear in public to uphold the image of a compliant stablecoin designed for ecosystem protection, but his comment implies it’s not entirely accurate. He pointed out that despite having a large workforce, Circle does not seem to have an incident response team equipped to handle DeFi hacks or exploits.
This criticism comes at a time when discussions about stablecoin regulation and anti-money laundering efforts are intensifying. The crypto space is growing even more worried about stablecoins when they connect with state-sponsored hacking outfits such as Lazarus.
The Bigger Picture
It’s been claimed that the Lazarus Group, a hacking group suspected to have ties with North Korea, has purportedly swiped approximately $3 billion from various significant attacks within the digital currency sector. If these allegations are true, the ill-gotten gains could potentially finance the development of weapons by this organization.
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2024-09-16 01:12