Blockchain investigator ZachXBT has raised the alarm over North Korea’s use of Circle’s USDC. He says that IT workers in the sanctioned state have been moving millions of dollars through the stablecoin network.
According to him, Circle has done nothing to freeze these transactions. This claim comes just after Circle filed for a US national trust bank charter and floated shares in a June IPO.
Details on the Claims
ZachXBT pointed to “high eight figures” in recent transaction volume tied to North Korean addresses. He suggests that these payments support illicit schemes run by the Lazarus Group, the hacking arm long linked to Pyongyang.
The investigator argues that Circle’s compliance checks have failed to flag or stop the flows. He calls the surge in activity part of a “crime super cycle,” where few seem to notice or care.
Circle’s Compliance Stance
Circle has stated in public filings that it uses strict protocols to monitor USDC movements. The firm says it works with regulators and firms to freeze suspect accounts.
et ZachXBT insists that none of these measures have been applied here. He believes that if the claims hold up, they could undercut Circle’s promises and raise doubts about stablecoin safety.
Ripple Rivalry Enters the Debate
The discussion took on an extra edge when an XRP supporter asked if another stablecoin, RLUSD from Ripple, might offer safer rails. ZachXBT shut down that idea.
He said he trusts Circle, Paxos, and Tether more than Ripple. His view is that Ripple’s partnerships often reflect paid deals, not real user adoption. By contrast, he says, USDC and other top coins have organic networks of users.
Wider Risks for Crypto
If North Korea really can tap USDC at scale, the case would highlight a broader gap in crypto oversight. Regulators in the G7 have already talked about curbing Pyongyang’s hacking of exchanges.
Also Read: Circle Teams Up with OpenPayd to Streamline $130B in Fiat to Stablecoin Transactions
They worry that stolen funds end up in digital tokens that cross borders with ease. This latest claim may push policymakers to tighten rules on stablecoin issuers. It could also prompt fresh actions to track and stop sanctioned actors from using crypto.
Circle’s Banking Bid
Meanwhile, Circle is pressing ahead with its move into regulated finance. The company applied to become a US national trust bank. This step would let Circle offer deposit accounts, payments, and custody services under federal oversight.
It follows Circle’s listings debut in June, which raised both capital and expectations for its next phase. The banking plan aims to anchor USDC more firmly in the mainstream financial system.
Market Reaction
Investors have shown mixed reactions. Circle Internet Group (NYSE: CRCL) has slid by 28% over the past week as global players are getting into the stablecoin market. Some also worry that any regulatory blowback could hit USDC’s value or usage.
Others see the bank charter as a way to bolster confidence and secure clearer paths for growth. Analysts will watch closely how US regulators respond to both the alleged misuse and Circle’s banking push.
What Comes Next?
Circle has not yet publicly addressed ZachXBT’s specific claims. The company may face fresh questions from banks and regulators about its controls.
Crypto firms will likely review their systems to avoid similar exposure. In parallel, policymakers could accelerate efforts to govern stablecoins more tightly.
The unfolding story of USDC, North Korea, and Circle’s banking ambitions will test the limits of crypto compliance and policy. If the allegations prove accurate, it could shake trust in stablecoins and reshape regulatory agendas.
Also Read: Circle’s Market Cap Hits $63.89B Surpassing USDC Circulating Supply