Circle Freezes $58 Million in USDC Linked to Libra Meme Coin Scandal

TLDR

Table of Contents

Circle froze $57-58 million worth of USDC in Solana wallets tied to the Libra meme coin team following a court order
The freeze affects two wallets containing $44.59 million and $13.06 million in USDC that can no longer be moved or sold
Law firm Burwick Law obtained a temporary restraining order in federal court, with a preliminary injunction hearing set for June 9, 2025
The Libra token scandal involved Argentine President Javier Milei promoting the coin before it crashed 90% after launch
Circle filed for an IPO on the New York Stock Exchange targeting a $6.7 billion valuation on the same day as the freeze

Circle has frozen nearly $58 million worth of USDC stablecoins in two Solana wallets connected to the controversial Libra meme coin team. The action occurred on Tuesday following legal action by multiple parties seeking to recover funds from the token scandal.

The frozen accounts contain $44.59 million and $13.06 million in USDC respectively, according to Solana block explorer Solscan. These funds are now completely immovable and cannot be sold or transferred by their owners.

ALERT: $57M OF USDC ASSOCIATED WITH LIBRA FROZEN BY CIRCLE
Two Libra accounts have just been frozen by Circle, including the Libra deployer wallet.
These accounts contained a combined $57M in USDC which is now immobile. pic.twitter.com/HpmaM5HwVJ
— Arkham (@arkham) May 28, 2025

Circle, as the issuer of USDC, maintains the technical ability to freeze tokens under its blacklisting policy. The company typically takes such action in cases involving major exploits or at the request of law enforcement agencies.

Crypto law firm Burwick Law claims responsibility for securing the freeze through a temporary restraining order from a federal court in the Southern District of New York. Max Burwick, representing the firm, confirmed the legal action in a statement to media outlets.

“Yesterday, a federal court in SDNY entered a temporary restraining order at our request, freezing approximately 57.65 million USDC held at Circle,” Burwick said. The firm will return to court on June 9, 2025 for a preliminary injunction hearing to maintain the asset freeze throughout ongoing litigation.

Martin Romeo, a plaintiff in the Argentine case surrounding the Libra token, separately claimed the freeze resulted from a request by Argentina’s justice department. Multiple parties have taken credit for the action on social media platforms.

Background of the Libra Scandal

The Libra meme coin launched in February with promotion from Argentine President Javier Milei on social media platform X. The Solana-based token quickly reached a multi-billion-dollar market capitalization before crashing nearly 90% shortly after launch.

The dramatic price collapse led to accusations of a pump-and-dump scheme as wallets connected to the token team cashed out large profits. Investors who bought during the peak suffered massive losses when the token value plummeted.

President Milei later faced fraud charges related to his promotion of the token. The Argentine government established a task force to investigate the matter, though this body was dissolved last week according to government documents.

Burwick Law previously filed a class-action lawsuit against Kelsier Ventures and Meteora, including named executives from both companies. The suit targets their respective roles in the Libra token controversy and seeks damages for affected investors.

Centralization Concerns Raised

The freeze has sparked debate within the cryptocurrency community about the centralized nature of major stablecoins. Critics point out that Circle can unilaterally restrict access to user funds when deemed necessary for legal or regulatory compliance.

While USDC provides stability and regulatory compliance, the ability to freeze tokens demonstrates the centralized control mechanisms built into the system. This contrasts with the decentralized principles that many cryptocurrency advocates support.

Some community members have questioned the grounds for the freeze, noting that no criminal charges appear pending against the team leaders. The lack of official explanation from Circle has fueled speculation about the specific legal basis for the action.

On-chain records confirm the freeze transactions but provide limited details about the underlying reasons. Industry observers expect more information to emerge as legal proceedings continue and regulatory investigations potentially expand.

Circle filed for its initial public offering on the New York Stock Exchange on the same day as the freeze, targeting a $6.7 billion valuation. The timing highlights the company’s growing prominence in the traditional financial sector while maintaining its cryptocurrency operations.

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