Circle Defends USDC Freeze Policy After Drift Hack Criticism Grows

TLDR

• Jeremy Allaire said Circle freezes wallets only under court or law enforcement direction.
• Critics focused on about $230 million in USDC linked to the Drift exploit.
• Allaire said private intervention creates a “moral quandary” for Circle.
• Circle signed partnership agreements with Dunamu and Bithumb in South Korea.
• Circle said it may seek local licenses if South Korean law permits operations.

Circle defended its response to the Drift exploit during a press conference in Seoul on Monday. CEO Jeremy Allaire said the company cannot freeze USDC wallets without legal authority. He said private action without court or law enforcement direction creates a “moral quandary.”

Allaire Says Circle Follows Legal Orders on USDC Freezes

Allaire addressed criticism over $230 million in USDC linked to the Drift exploit. The funds moved from Solana to Ethereum through Circle’s Cross-Chain Transfer Protocol.

Online criticism grew after blockchain investigator ZachXBT questioned Circle’s refusal to freeze those wallets. He argued Circle had the technical ability to act faster.

Allaire rejected that standard and framed the issue as a legal duty. “Circle follows the rule of law,” he said in Seoul.

He said Circle can freeze wallets only when courts or law enforcement issue directions. He added that unilateral action would let a private company decide disputed outcomes.

Allaire said that approach creates a “very risky proposition” for any issuer. He also said Circle wants any expanded authority written into law.

He said Circle has discussed a “safe harbor” with U.S. lawmakers working on the Clarity Act. That provision would permit preventive action in extreme cases.

Circle Expands South Korea Partnerships as Local Crypto Rules Advance

Circle also announced a memorandum of understanding with Dunamu and Bithumb on Monday. The two exchange operators often handle more than 95% of South Korea’s daily crypto trading.

Allaire said the agreements cover USDC adoption on Korean exchanges and other technology work. He said Circle sees room for local partnerships as regulations develop.

Circle already works with South Korean financial groups, including Hana Financial Group. Those ties come as lawmakers draft the Digital Asset Basic Act.

The bill would set rules for stablecoins, ETFs, and industry standards. It could also create a framework for a won-denominated stablecoin market.

President Lee Jae-myung has backed a Korean won stablecoin as a policy priority. Allaire said Circle would study entry if the law permits foreign issuers.

He said Circle would build a local presence and seek licenses in South Korea. He also said the company does not plan to issue its own stablecoin.

Instead, Allaire said Korean banks and fintech companies will likely issue local stablecoins. Circle expects to support them with existing issuance and blockchain technology.

“The technology platforms we’ve built” can serve Korean digital currency projects, Allaire said. Circle said it may partner with local issuers and industry consortia. The company said licensing would follow any clear opening under Korean law.

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