USDC Issuer Circle Accused of ‘Profiting’ From Lazarus Group Hack

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As a seasoned crypto investor with a keen eye for the intricacies of the digital currency world, I find myself increasingly troubled by the latest developments involving USDC issuer Circle and the Lazarus Group. Having witnessed the evolution of this industry from its infancy, I’ve come to expect better from key players like Circle, especially when it comes to matters of security and transparency.

Circle, the issuer of USDC, is under scrutiny following allegations that they have benefited from transactions connected to the cybercriminal group Lazarus from North Korea, as put forth by blockchain detective ZachXBT. Known for his investigative work within the Web3 community, ZachXBT voiced his disapproval on social media platform X, targeting Circle and its CEO Jeremy Allaire. The criticism stemmed from the perceived delay in effectively blacklisting wallets associated with illegal activities.

USDC Issuer Faces Backlash

As per ZachXBT’s statement, Circle postponed blocking funds linked to the Lazarus Group by approximately 4.5 months compared to other significant stablecoin providers. Moreover, ZachXBT voiced his disappointment over what seemed like Circle’s inactivity in hindering the group from utilizing its platform for money laundering activities.

ZachXBT alleges that, unlike in situations where there has been a DeFi exploit or hack, you have never blocked any accounts, even when given the opportunity, while still benefiting from transactions. This claim arises following the USDT issuer’s decision, alongside other stablecoin issuers, to blacklist two wallet addresses associated with Lazarus Group.

A well-known group, infamous for its past activities in cryptocurrency heists, is under suspicion for orchestrating a recent cyber attack on the Indonesian crypto platform Indodax. This incident took place on September 11. The aftermath of this event resulted in over $20 million being stolen from the exchange, forcing it to temporarily halt operations while they evaluate the extent of the damage.

After a while, the Indodax trading platform resumed operations for transactions. The deposit, withdrawal, and staking services were brought back online progressively. ZachXBT’s investigation unveiled that four significant stablecoin providers – Tether, Circle, Paxos, and Techteryx – have barred two addresses linked to the Lazarus Group from their systems.

The total value stored in these wallets amounts to approximately $4.96 million, distributed among several stablecoins such as USDT, USDC, BUSD, and TUSD. Notably, around $1.65 million that was initially held by the hackers has been put on hold by different cryptocurrency exchanges during an ongoing probe. Consequently, a grand total of $6.98 million has been frozen from wallets linked to this particular group.

Brief History of Lazarus Group’s Attacks

Additionally, it’s important to note that the Lazarus Group has been implicated in multiple instances of large-scale cryptocurrency heists. According to ZachXBT, these North Korean hackers are known to have laundered approximately $200 million from various cyberattacks into stablecoins such as USDT and USDC over the period between 2020 and 2023.

Furthermore, this latest event underscores the part that stablecoins can play in money laundering operations within the cryptocurrency sphere. Interestingly, other stablecoin providers are taking a more aggressive approach to prevent such illegal activities.

More recently, Tether joined forces with Tron and TRM Labs to establish the T3 Anti-Financial Crime Unit – a team focused on combating fraud and unlawful activities linked to USDT. As reported by Tether, this newly formed group has already immobilized over $12 million worth of USDT that were associated with scams and illicit activities.

The USDC issuer has not yet responded directly to ZachXBT’s accusations. On the other hand, discussions on stablecoin regulation and anti-money laundering efforts are intensifying. This comes amid rising concerns over the use of digital assets for illegal activities by state-backed hacker groups like Lazarus.

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2024-09-14 19:46