Circle Explains Why It Didn’t Freeze Stolen USDC in the $275 Million Drift Hack

Circle’s Chief Strategy Officer Dante Disparte published a direct defense of the company’s authority to freeze USDC (USDC), naming the $270 million Drift Protocol exploit as the catalyst.

The blog post and a separate X statement followed weeks of criticism from onchain investigator ZachXBT, who accused Circle of inaction while stolen funds moved through its Cross-Chain Transfer Protocol.

Circle Responds to Freeze Criticism

Circle framed its freeze capability as a compliance obligation rather than a discretionary tool. He wrote that USDC freezes happen only when the law compels action through a formal process.

When Circle freezes USDC, it is not because we have decided, unilaterally or arbitrarily, that someone’s assets should be taken from them. It is because the law requires us to act,” wrote Disparte in a blog.

The statement appeared to address ZachXBT’s earlier accusation that Circle failed to freeze stolen USDC during the April 1 exploit.

The investigator had noted that hundreds of millions in USDC moved from Solana (SOL) to Ethereum (ETH) via CCTP during U.S. business hours without intervention.

Disparte also acknowledged a tension familiar to the crypto industry. He argued that the same framework protecting holders from arbitrary interference also limits how fast an issuer can act during an active exploit.

Disparte Pushes for Faster Legal Frameworks

Beyond defending existing policies, Disparte called for new legal structures that would allow issuers and exchanges to respond more quickly to theft without creating overreach risks.

He said the tools to intervene exist, but the legal authorization for rapid, coordinated action does not.

He pointed to the GENIUS Act and the CLARITY Act as vehicles for codifying those standards. The U.S. Treasury Department is already advancing rulemaking to implement the GENIUS Act, with the FDIC approving a proposed rule on April 7.

In a parallel move, Disparte published an op-ed urging the UK to claim a second-mover advantage in stablecoin regulation.

He argued that combining elements of Europe’s Markets in Crypto-Assets Regulation (MiCA) with the GENIUS Act framework could position London as a competitive hub.

The contrast between aggressive civil enforcement and perceived inaction in the face of a confirmed exploit remains a focal point for critics questioning how regulated issuers exercise their freeze authority.