- Sony blockchain partners with Circle, the issuer of $USDC. This could benefit both companies significantly, taking Soneium (Sony’s Layer-2 blockchain) to new levels.
- $USDC has a market cap of $35.5B (+42.51% since January), and a $4.6B 24-hour trading volume (+71.96%). The stablecoin has a 21% market share.
- ZachXBT (blockchain sleuth) accused Circle of profiting from Lazarus Group’s (North Korean hacker group) scams by blacklisting its funds almost five months later than other stablecoin issuers.
Sony’s blockchain (Soneium) announced a partnership with Circle, the second-largest stablecoin issuer in the world ($USDC).
Soneium is Sony’s advent into crypto, a Layer-2 blockchain that partnered with Startale Labs, Alchemy Pay, Reservoir, Sentio, and Chainlink to ensure widespread adoption and quick development. And quick development it achieved, launching its mainnet on August 23 and Minato testnet on August 28.
Its new partnership with Circle underscores Sony’s determination to take Soneium to the next level. $USDC currently has a market cap of $35B and a 24-hour trading volume of $4.6B.
At the same time, Circle is also embroiled in a PR debacle after ZachXBT (blockchain sleuth) criticized the company for profiting from transactions tied to Lazarus Group scams.
Could this impact its partnership with Soneium? And will $USDC suffer? Let’s dig deeper to find out.
$USDC to Empower Soneium’s Creator Economy
In a Business Wire press release, Circle ($USDC issuer) announced its strategic collaboration with Sony Block Solutions Lab, the company behind Soneium.
Jun Watanabe (Sony Block Solutions Lab CEO) is optimistic about the partnership and thinks it will help Soneium carve out a slice of the blockchain market.
By integrating Circle’s financial infrastructure with Soneium, we are set to redefine the landscape of digital entertainment and finance […] creating a more interconnected and efficient digital ecosystem. We are excited about the potential this partnership unlocks […] for delivering tangible benefits to Soneium and users worldwide.Jun Watanabe, CEO of Sony Block Solutions Lab
Jeremy Allaire (Circle CEO) was equally thrilled about $USDC’s expected accelerated adoption following the Soneium partnership. The company has a history of innovative strategic partnerships, like the one with Apple for NFC payments, which opened a $15.7T market for Ethereum.
Other Circle partnerships include Visa, Mastercard, Robinhood, MoneyGram, and BlackRock.
With its $35.5B market cap (+42.51% since January) and $4.6B 24-hour trading volume (+71.96%), $USDC would cement Soneium’s position in the blockchain industry and likely attract the eyes of serious investors.
Unfortunately, Circle is currently in the middle of a PR crisis with ZachXBT (internet sleuth), whose claims could lead to legal ramifications for Circle and potentially impact its image (and thus its collaboration with Soneium).
Circle Accused of Profiting from Lazarus Group Scams
Blockchain investigator ZackXBT accused Circle of hypocrisy on X, calling the company out for not blacklisting Lazarus Group’s funds earlier.
Lazarus Group is a North Korean hacking group attributed with several high-profile hacks, including that of crypto exchange Indodas on September 11. The hack resulted in losses over $20M, with Indodas suspending operations.
Almost immediately after the news, three of the four major stablecoin issuers (Paxos, Tether, and Techteryx) blacklisted two Lazarus Group addresses, freezing $4.96M (in $USDT, $USDC, $BUSD, and $TUSD), but not Circle.
Circle ($USDC issuer) waited over four months before blacklisting the North Korean hackers’ addresses . ZachXBT claims this delay allowed Circle to continue profiting from transactions from the hacking group.
On the other hand, blacklisting funds typically requires a court order, and it’s unclear why Circle waited for another four months before taking action. Some users also question whether fund blacklisting should even be a thing on a supposedly ‘permissionless’ blockchain.
Zach’s investigation also shows another worrying trend – stablecoins are extremely popular with scammers for laundering stolen funds. Between 2020 and 2023, Lazarus Group laundered ~$200M into stablecoins (such as $USDT and $USDT), from various exploits.
This includes the $625M theft from Axie Infinity Ronin Network in March 2022, and $611M Poly Network exploit in August 2021.
This begs the question, ‘should stablecoin issuers take a more proactive approach for illicit activities?’ ZachXBT seems to think so, and many X users agree.
The Big Picture – Soneium/Circle Partnership at Risk?
Despite Circle’s slow response to blacklist Lazarus’ addresses, it’s unlikely that it’ll impact its collaboration with Soneium. I don’t see it as ‘significant enough’ compared to the partnership, which can legitimately revolutionize digital transactions.
Plus, the divide between users who want more regulation and those who want a more permissionless blockchain is also muddying the discussion. Do you think that crypto payment companies should prioritize blacklisting known malicious actors?
References
- Circle and Sony Block Solutions Labs to Enable USDC on Soneium to Empower a Creator Economy (Business Wire)
- ZackXBT X Post About Circle (X)
- The crypto exchange Indodax closes operations to investigate a $22 million hack (Cryptonomist)
- Axie Infinity’s Ronin Network Suffers $625M Exploit (Coindesk)
- Cross-Chain DeFi Site Poly Network Hacked; Hundreds of Millions Potentially Lost (Coindesk)
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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