Circle Says It Won’t Rush to Reverse Arc Transactions Even After USDC Hack Worth Hundreds of Millions

Nikhil Chandhok, Circle's chief product and technology officer, said the company would be cautious about rolling back transaction records on its Arc blockchain even after a major hack. Reversing the chain could damage blockchain immutability and make it harder to restore trust in financial infrastructure, he said.

In an interview with Bankless on Sept. 16, Chandhok was asked how Circle would respond if a lending protocol were attacked by North Korean hacking group Lazarus and lost tens of millions to hundreds of millions of dollars in USD Coin, or USDC. He said it was difficult to define a response in advance for a specific hypothetical incident.

Still, he said, the basic principle is that Arc is an immutable blockchain. Arc is public financial infrastructure backed by more than 20 validators, he added.

Chandhok had also been asked whether the network could be restored if a large amount of USDC disappeared because of user error. "We're not interested in rolling back the blockchain for any reason," he said. Circle does not have any special authority to reverse transactions, he added, and users on Arc, as on other blockchains, should assess the risks of the tokens and smart contracts they use.

Arc is a layer-1 blockchain designed by Circle for financial markets and real-time fund transfers. It uses USDC to pay transaction fees. BlackRock, the Depository Trust & Clearing Corporation, Visa, Mastercard and Standard Chartered are among its initial validators.