David Edwards
Blockchain investigator ZachXBT has raised serious compliance concerns about Circle’s USD Coin (USDC), alleging that the stablecoin is being used by North Korean entities for illicit transactions without intervention from the issuer. These claims emerge as Circle (NASDAQ: CRCL), fresh off its high-profile IPO in June, seeks a U.S. banking license.
According to ZachXBT, sanctioned North Korean IT operatives are leveraging USDC to move illicit funds, with Circle allegedly failing to freeze such transactions despite its stated commitment to regulatory compliance. “There are high eight figures in recent volume tied to this activity,” the investigator claimed, signaling potential vulnerabilities in Circle’s enforcement protocols.
This issue could not come at a more delicate time for Circle, whose CRCL stock has seen significant volatility—falling 28% over the past week and now trading around $180 after peaking at $300 post-IPO. The drop coincides with insider selling from prominent investors, including Ark Invest’s Cathie Wood.
While ZachXBT’s criticism sparked debate, particularly in comparison to Ripple’s RLUSD stablecoin, the investigator reaffirmed confidence in Circle over Ripple, Paxos, or Tether, emphasizing Circle’s more transparent user base.
Circle’s application for a U.S. State Bank License may now face increased scrutiny from regulators, especially given the geopolitical sensitivity surrounding North Korea’s use of cryptocurrency. The Lazarus Group, a North Korean state-backed cyber unit, has previously been linked to numerous high-profile crypto exchange hacks, prompting concern among G7 nations and global watchdogs.
Despite the controversy, Bernstein analysts remain bullish, suggesting the CRCL stock could rebound by as much as 30%, targeting $230. They maintain that Circle’s position as a stablecoin market leader and its broader vision for transformative payment infrastructure make it a long-term strategic holding.
