Key Highlights
- Circle reversed the freeze on one of 16 blacklisted USDC wallets following widespread criticism.
- The unlocked wallet associated with Goated.com recovered approximately $130,966 in USDC.
- ZachXBT initially disclosed the freeze and raised concerns about Circle freezing operational wallets unconnected to alleged wrongdoing.
- Circle stated the action followed a sealed civil proceeding in New York.
- The majority of the blacklisted USDC wallets continue to be frozen as of this report.
Circle lifted restrictions on a single frozen USDC wallet following mounting public pressure. The stablecoin issuer had blacklisted 16 operational wallets connected to functioning businesses several days prior. Blockchain sleuth ZachXBT documented the reversal and raised questions about the initial freezing decision.
Circle Lifts Restriction on Single USDC Wallet
Circle implemented freezes on 16 USDC hot wallets on March 23 in response to a sealed civil court directive from New York. The move interrupted withdrawals and payment processing for cryptocurrency exchanges, online casinos, foreign exchange platforms, and payment service providers. Multiple companies experienced liquidity challenges due to locked operational capital.
On March 26, Circle lifted the restriction on a single wallet connected to Goated.com. The wallet holder regained control of roughly $130,966 in USDC once the freeze ended. ZachXBT highlighted the development and suggested additional reversals might occur.
He previously challenged Circle’s decision to target unconnected hot wallets managing standard business operations. In a March 24 statement, he questioned the rationale behind widespread blacklisting stemming from a civil proceeding. He subsequently characterized the freeze as “potentially the most incompetent” enforcement action he had witnessed over five years.
ZachXBT referenced the sealed New York litigation and identified a plaintiffs’ attorney from Willkie Farr. He expressed concern about the judge and expert witness having insufficient blockchain knowledge. He called on Circle CEO Jeremy Allaire to explain the company’s internal compliance procedures.
Circle has declined to provide specifics, pointing to the confidential nature of the court proceedings. The majority of the affected wallets remain under restriction currently. Companies associated with those addresses continue experiencing operational limitations.
Stablecoin Freezes Remain Subject of Industry Scrutiny
Circle has implemented USDC freezes previously in accordance with legal and regulatory mandates. In 2020, the company blacklisted an address containing roughly $100,000 in USDC. In 2022, Circle blocked addresses associated with Tornado Cash following U.S. Treasury Department sanctions.
During May 2025, Circle froze approximately $57 million in USDC related to a civil matter involving the LIBRA memecoin fraud scheme. The company indicated it followed legally binding orders in these instances. Circle retains blacklist capabilities embedded in its USDC smart contract architecture.
Tether, the entity behind USDT, has disclosed more extensive enforcement measures. The organization reported freezing over $4.2 billion in USDT connected to illicit operations. Tether noted that $3.5 billion of this amount occurred from 2023 onward.
Throughout 2023, Tether froze $435 million across 326 wallet addresses. In early 2026, the company restricted $61 million in USDT associated with romance fraud schemes. During 2025, Tether blocked $225 million linked to an investment fraud operation.
Tether additionally froze $23 million tied to the sanctioned Russian exchange Garantex. The company has collaborated with the U.S. Department of Justice, FBI, and Secret Service. Tether has destroyed tokens following seizures to facilitate asset recovery initiatives.
As of March 26, only one among the 16 blacklisted USDC wallets has received restored access. ZachXBT indicated that additional developments may surface as the legal matter advances. Circle has provided no public comment beyond referencing the sealed court directive.
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