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ZachXBT Says Circle Froze 16 Legitimate Wallets, Missed Real Hacks – Crypto News Bitcoin News

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Key Takeaways:

  • Onchain investigator ZachXBT identified 15 cases totaling over $420M in illicit USDC flows Circle failed to freeze promptly since 2022.
  • The Drift Protocol exploit saw 232M USDC bridged via Circle’s own CCTP over 6 hours with no freeze during U.S. business hours.
  • Circle froze 16 legitimate business wallets in a March 2026 civil case, including DFINITY Foundation’s ckETH Minter contract, with 5 later unfrozen.

Did Circle Fail to Freeze Stolen USDC? ZachXBT Says Yes, With Receipts

The thread, titled “Welcome to the Circle USDC files,” was posted to X and laid out specific hacks, frauds, and North Korea-linked theft cases where Circle held the technical ability and contractual authority to freeze or blacklist USDC wallets but did not act promptly, or at all. ZachXBT cited onchain addresses, transaction timelines, and communications involving law enforcement, victims, and private-sector security firms.

Among the cases, ZachXBT flagged the April 1, 2026, Drift Protocol exploit, attributed to North Korea’s Lazarus Group by blockchain analytics firm Elliptic, as a standout example. Attackers bridged more than 232 million USDC from Solana to Ethereum using Circle’s own Cross-Chain Transfer Protocol in over 100 transactions across six hours during U.S. business hours. Circle made no freeze.

ZachXBT’s post highlights the Swapnet exploit from January 25, 2026, which saw $16 million stolen, with 3 million USDC sitting accessible for two days while law enforcement and private investigators submitted temporary freeze requests that Circle denied. The funds were swapped before a court order could be obtained.

In the Cetus Protocol hack from May 22, 2025, attackers took $223 million and bridged 61 million USDC via Circle’s infrastructure over 90 minutes. Circle blacklisted the funds one month later, after they had already been converted to Ether.

ZachXBT also pointed to the Mango Markets exploit from October 2022, where $57.5 million was routed through a Circle deposit address and never frozen onchain. The exploiter was later charged by the U.S. Securities and Exchange Commission (SEC). In the Nomad Bridge hack from August 2022, approximately $45 million USDC sat freezable for 30 to 45 minutes following a $190 million breach. He says Circle did not act.

The investigator noted Circle took 4.5 months longer than Tether, Paxos, and other stablecoin issuers to freeze Lazarus Group-linked addresses flagged in an April 2024 report. He also documented delayed responses involving Garantex, the sanctioned Russian exchange, where over 200,000 USDC went untouched while Tether froze $22 million in a parallel action.

Circle’s official position, delivered through spokesperson statements to the media, holds that the company freezes assets only when legally required, including in response to sanctions designations, law enforcement orders, or court mandates. The company says preemptive freezes without legal authorization expose Circle to liability and infringe on user rights. Its terms of service permit discretionary action, but the company’s practice prioritizes formal legal process.

ZachXBT acknowledged Circle builds quality products and said he personally holds USDC. His criticism centers on whether Circle’s compliance priorities match the losses the broader crypto ecosystem absorbs when freezes are delayed or withheld.

Legitimate Operations Frozen

A separate incident amplified the criticism. On or around March 23, 2026, Circle froze USDC balances in 16 unrelated business wallets tied to a sealed U.S. civil case in New York, identified as approximately case 26-cv-2327. The wallets belonged to crypto exchanges, online casinos, forex brokers, payment processors, and the ckETH Minter smart contract operated by the DFINITY Foundation, which bridges the Internet Computer Protocol to Ethereum.

ZachXBT called it potentially the single most incompetent freeze he had witnessed in more than five years of investigations. He said basic onchain analysis would have shown the wallets were active operational infrastructure with no apparent connections to each other or to the underlying civil matter.

At least five of the 16 wallets were later unfrozen, including DFINITY’s contract and Goated.com’s wallet holding roughly $131,000 USDC. More reversals were expected as of the time of reporting. Circle issued no detailed public rebuttal to the full thread as of April 4, 2026.

The cases collectively raise direct questions about how a U.S.-regulated stablecoin issuer headquartered in New York weighs legal caution against real-world losses from illicit activity its infrastructure helps move.

Digital asset treasuries must now earn their keep

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The era of buying bitcoin and calling it a treasury strategy is over.

By early 2026, more than 200 publicly listed companies hold digital assets on their balance sheets, collectively managing over $115 billion (DLA Piper, October 2025). The total market capitalization of these companies reached approximately $150 billion by September 2025 – a nearly fourfold increase from the year before. Yet several of these companies now trade at discounts to the value of the assets they hold. The market is sending a clear signal: accumulation alone is no longer enough.

Investors want to see capital discipline and economic return. Management teams have responded with share repurchase programs and transparency metrics such as “BTC per share,” designed to show the value a treasury adds beyond the token price (AMINA Bank Research, 2026). The shift from passive accumulation to active yield generation – from “DAT 1.0” to “DAT 2.0”—is now the defining theme of the sector.

Three broad models are emerging. Each carries a different risk – return profile and places distinct demands on governance, technical capability and infrastructure.

Infrastructure participation and staking

The most protocol-native approach involves staking tokens to support network consensus and earning rewards in return. For bitcoin-focused treasuries, this increasingly extends to the Lightning Network and other native infrastructure that generates routing and liquidity-based fees. Staking requires careful analysis of the technical security and smart contract risks.

The numbers have grown quickly. Bitmine Immersion Technologies reported over 3 million staked ETH by early 2026, with total holdings of $9.9 billion and annualized staking revenue of approximately $172 million (SEC Filing, March 2026). Its proprietary validator network marginally outperformed the Composite Ethereum Staking Rate, demonstrating the edge that institutional-grade infrastructure can deliver even in a protocol-level yield environment.

SharpLink Gaming deployed $200 million in ETH into restaking infrastructure via EigenCloud, targeting higher yields by securing applications ranging from AI workloads to identity verification (SEC Filing, 2025). Restaking – where already-staked ETH is used to secure additional services, with careful governance.

Key onchain revenue metrics, Greenage

Active trading and market-driven income

A second set of strategies leverages market structure – funding-rate arbitrage, basis trading and options premiums. These can be effective and often market-neutral, but they demand trading expertise, robust risk controls and round-the-clock monitoring. The governance implications are significant: this approach effectively converts a treasury function into a trading operation. Like any trading function, it can be difficult to find skilled staff required to monitor complex positions and correlation risks.

One prominent Japanese listed company illustrates both the potential and the complexity. Holding over 35,000 BTC by the end of 2025, it generated the equivalent of approximately $55 million in bitcoin income revenue through option-based strategies, with operating profit growth exceeding 1,600% year-on-year. Yet the same company recorded a substantial net loss due to non-cash mark-to-market revaluations under local accounting standards (TradingView; Kavout, 2026). For investors, this disconnect between operational cash flow and reported earnings makes evaluation materially harder – and underscores why governance and transparency matter as much as headline returns.

Galaxy Digital offers a contrasting hybrid model, combining its own digital asset treasury with institutional services including collateralized lending, strategic advisory, and infrastructure. In Q3 2025, Galaxy posted a record adjusted gross profit of over $730 million (Mint Ventures Research, 2025). Notably, the firm has diversified its yield sources beyond pure crypto by repurposing its Helios mining facility as an AI compute campus secured by long-term contracts – a signal that the most resilient treasuries may be those that derive income from multiple, uncorrelated sources.

Galaxy’s Revenue Diversification, Image provided by Greengage, 2026

Credit deployment and net interest margin

A third route treats digital assets as productive balance-sheet capital. The model involves borrowing against crypto holdings on a non-recourse basis, receiving stablecoin liquidity, and deploying it into higher-yielding private credit. It preserves long-term exposure to the underlying asset while generating recurring interest income from short-duration, real-economy lending. In particular, this strategy demands expertise in yield, credit risk and fixed income.

The mechanics draw directly from traditional banking: liquidity management, underwriting, governance and controlled leverage. Under this type of model, a company acquires bitcoin, borrows against those holdings on a non-recourse basis—meaning the downside is limited to the collateral—and deploys the proceeds into diversified private credit portfolios supporting real-economy lending. If bitcoin appreciates, the company retains the upside after repaying the loan, combining potential capital gains with recurring interest income.

Greenage table

For credit deployment models to work credibly, they need to be grounded in operational financial infrastructure rather than built from scratch. The approach is most effective when it extends from an existing platform with real lending relationships and established client accounts. In our view at Greenage, this is also an area where governance and due diligence frameworks are particularly important, given that capital is being deployed into third-party credit opportunities that must be assessed on a counterparty-by-counterparty basis.

The success of this model is also tied to the maturation of stablecoins as institutional infrastructure. By 2026, stablecoins underpin cross-border payments, real-time settlement and T+0 clearing (same-day settlement) for enterprises (Foley & Lardner, January 2026). Coinbase Institutional projects total stablecoin market capitalization could reach $1.2 trillion by 2028 (Coinbase Institutional, August 2025). For credit deployment strategies, stablecoins provide a sound medium for capital deployment in lending markets.

Capital Deployment Cycle, Image provided by Greengage, 2026

The new measure of maturity

Recent market conditions have reinforced a simple truth: price appreciation alone is not a treasury strategy. The growing range of yield solutions reflects a sector learning from its own history—sustainable income generation makes digital assets more productive components of a corporate balance sheet.

No single model is definitive. The most effective treasuries will blend approaches depending on risk appetite, operational capability and governance structure. But the direction of travel is clear. Passive holding is no longer sufficient to justify digital assets’ place on the balance sheet. Yield is becoming the central measure of treasury maturity –and the core factor in how the market values companies with digital asset exposure.

The winners in this next phase will not be the largest holders. They will be the most disciplined operators.

The New Treasury Equation, Image provided by Greengage, 2026

Important Notice:

This article has been prepared by Greengage & Co. Limited for informational and thought leadership purposes only. It is intended solely for use by businesses, professional counterparties and institutional market participants and is not directed at retail consumers. It does not constitute financial advice, investment advice, a financial promotion, or a recommendation or inducement to buy, sell, or hold any asset, security, or financial instrument.

Digital assets are subject to significant price volatility and regulatory change. Past performance is not indicative of future results. All investments carry risk, including the potential loss of capital. Forward-looking statements and market projections referenced herein are sourced from third-party research and do not represent the views or predictions of Greengage & Co. Limited.

Greengage & Co. Limited is not authorized or regulated by the Financial Conduct Authority for investment business. Greengage acts solely as an introducer to independent third-party service providers and does not arrange investments, provide lending, custody, or investment management services.

Readers should seek independent professional advice before making any investment decision.

UK’s shortest-serving Chancellor makes bold bitcoin bet

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Kwasi Kwarteng, the UK’s former Chancellor of the Exchequer who served just weeks in September 2022, is re-emerging with a new focus on bitcoin, monetary history, and long-term economic thinking.

Reflecting on the infamous mini-budget in an interview with CoinDesk, he was candid about the missteps. “The mini budget was literally two weeks after we took office, it was just very, very rushed business,” he said, referring to the period immediately after taking office on Sept. 6, followed by the death of Queen Elizabeth II two days later. The compressed timeline left little room for coordination or scrutiny. The fallout was severe, sending gilt yields sharply higher and helping expose the UK’s Liability-Driven Investment pension crisis.

Kwarteng still defends the intent behind the policy, warning the UK is now stuck in a fiscal “doom loop” where “you’re spending more money than you can raise in taxation,” and rising taxes ultimately “kill incentives in the economy.”

He also criticised the short-termism dominating both politics and markets. “Everything’s quarterly driven, people are either euphoric or freaking out. And actually, you’ve got to take a longer view.”

That longer view now shapes his thinking on bitcoin and money more broadly. While in office, he said, “the Treasury, the Bank of England are certainly aware of bitcoin and digital assets, but its still incredibly small,” highlighting what he sees as the UK’s reluctance to embrace innovation.

He also pointed to a cultural gap with Europe, noting Paris is becoming “quite forward leaning on digital assets.”
Kwateng also pushed back on criticism from Boris Johnson, after the former prime minister claimed Bitcoin was a “Ponzi,” arguing instead for a more open-minded view of emerging forms of money.

A new bitcoin treasury venture

Now involved with UK bitcoin treasury firm Stack BTC (STAK) as executive chairman, Kwarteng is putting those ideas into practice, with the company holding 31 BTC on its balance sheet.

The firm has drawn increasing political attention, with Reform UK leader Nigel Farage taking a 6% stake in the company.

For Kwarteng, the shift reflects a move away from reactive policymaking toward what he sees as a more resilient monetary future grounded in long-term thinking.

Nevada Judge Extends Kalshi Ban, Rules Event Contracts Unlicensed Gambling

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A Nevada judge has reportedly extended a ban preventing Kalshi from offering event-based contracts in the state, ruling that the products constitute unlicensed gambling under state law.

Judge Jason Woodbury said at a hearing in Carson City on Friday that he will grant a preliminary injunction requested by the Nevada Gaming Control Board, barring the company from allowing residents to trade on outcomes such as sports, elections and entertainment events without a gaming license, according to Reuters.

The decision extends a temporary restraining order issued on March 20, which will remain in effect through April 17 while the court finalizes longer-term restrictions.

Kalshi, based in New York, has argued that its contracts are financial derivatives, specifically “swaps,” that fall under the exclusive oversight of the Commodity Futures Trading Commission (CFTC).

Related: Appeals court denies Kalshi request to block Nevada enforcement action

Judge says Kalshi contracts mirror sports betting

Woodbury rejected Kalshi’s argument, claiming that there is a direct comparison between traditional sports betting and Kalshi’s platform, according to Reuters. He said that placing a wager through a licensed sportsbook and buying a contract tied to a game outcome are functionally the same, per the report.

“No matter how you slice it, that conduct is indistinguishable,” the judge reportedly said, adding that such activity qualifies as gaming under Nevada law and cannot be offered without proper licensing.

Kalshi notional volume. Source: Kalshi

The case marks the first time a state has secured a court-enforced ban currently in effect against the company.

Last month, Utah lawmakers also passed a bill targeting Kalshi and Polymarket that classifies proposition-style bets on in-game events as gambling, aiming to block such offerings in the state.

Related: Kalshi CEO fires back against Arizona criminal charges as ‘total overstep’

CFTC vows court fight over prediction market oversight

The CFTC has asserted authority over prediction markets, with Chairman Michael Selig warning that the agency is prepared to defend its jurisdiction in court against any challenges from states or other regulators.

Speaking at an industry conference last month, Selig said prediction markets can act as “truth machines,” arguing that when participants put money behind their views, these markets can produce more transparent and reliable signals about future events than traditional opinion polling.

Magazine: Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author