Circle Criticized for Slow Response in Lazarus Group Fund Freeze
Circle faces backlash for delaying action in freezing $5 million linked to North Korea's Lazarus Group, known for major crypto hacks.
Stablecoin issuers, including Circle, have come under fire after freezing nearly $5 million linked to North Korea’s Lazarus Group. The notorious hacker group is responsible for numerous high-profile cryptocurrency hacks, and the delay in freezing these funds has drawn sharp criticism.
$5 Million Freeze Hits Lazarus Group
On September 14, blockchain investigator ZachXBT revealed that stablecoin issuers such as Tether, Circle, Paxos, and Techteryx blacklisted two wallets connected to the Lazarus Group, holding approximately $4.96 million in assets. However, these wallets still contain $720,000 in DAI and $313,000 in Ethereum, which remain unfrozen.
This fund freeze follows a broader investigation conducted by ZachXBT in April, where he discovered that the Lazarus Group laundered over $200 million from 25 crypto-related hacks between 2020 and 2023. ZachXBT reported that a total of $6.98 million has been frozen so far, with $1.65 million held across multiple exchanges. He did not specify which exchanges are involved.
Criticism of Circle's Response
ZachXBT's frustration is aimed primarily at Circle, the issuer of the USDC stablecoin, for its slow response in freezing the Lazarus Group’s funds. He argued that Circle’s delayed actions—which took over four months longer than other stablecoin issuers—exposed its lack of commitment to protecting the cryptocurrency ecosystem from malicious actors.
He accused Circle of putting profits ahead of security, pointing out that the company’s failure to act promptly allowed the Lazarus Group to move funds through its platform. ZachXBT stated, "Circle pretends to be a compliant stablecoin protecting the ecosystem, but in reality, that’s not entirely true." He further criticized Circle’s lack of an incident response team, despite having over 1,000 employees, to manage funds after DeFi hacks or exploits.
Lazarus Group's Ongoing Threat
The Lazarus Group has been linked to numerous significant crypto hacks, including the recent $20 million exploit of the Indodax exchange. Over the years, investigators believe the group has stolen around $3 billion from the crypto industry. It is widely suspected that North Korea uses the funds to support its weapons programs.
ZachXBT’s findings underscore the persistent threat posed by the Lazarus Group and the critical need for quicker action from platforms like Circle in responding to fund movement tied to such malicious entities.
