Key Points
- Circle implemented freezes on 16 USDC wallets associated with exchanges, casinos, and currency services
- Blockchain investigator ZachXBT described it as “the single most incompetent freeze” he’s witnessed in over five years
- The freezes stem from a sealed civil case in U.S. courts, leaving affected entities without explanation
- One wallet connected to Goated.com, containing 130,966 USDC, has been unfrozen by Circle
- The controversy has intensified discussions about the risks of centralized stablecoin systems
Earlier this week, Circle implemented freezes on 16 USDC wallets tied to operational commercial entities, triggering widespread backlash throughout the cryptocurrency sector. The affected wallets belonged to various businesses including cryptocurrency exchanges, digital gambling platforms, and foreign exchange services.
Blockchain investigator ZachXBT brought the situation to public attention, noting that the impacted businesses seemed to have no apparent connection to each other.
According to ZachXBT, the freezing action was related to a sealed civil lawsuit in the United States. Due to the confidential nature of the proceedings, the wallet owners received no clarification regarding the freeze.
“The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses,” ZachXBT posted on X.
He strongly condemned Circle’s approach to the matter. “In my 5+ years of investigations, it could potentially be the single most incompetent freeze I have seen,” he stated.
ZachXBT emphasized that even rudimentary blockchain analysis tools would have revealed within moments that these were functioning business wallets. The transaction history showed thousands of operations, clearly demonstrating their commercial use.
Circle did not provide a response to comment requests from various media organizations as of press time.
Circle Reverses One Freeze
By midweek, Circle had reversed the freeze on one of the 16 affected wallets. The wallet, designated as “0x61f…e543,” is owned by the platform Goated.com. According to Arkham data, it presently contains 130,966 USDC.
ZachXBT indicated that he anticipates additional wallets will be unfrozen “in the near future.”
Centralization Concerns Come to Forefront
This episode has refocused attention on the mechanics of centralized stablecoin operations. Unlike physical currency or decentralized digital assets, stablecoins issued by entities such as Circle can be immobilized without advance notice.
Taylor Monahan, a security researcher at MetaMask, commented on X: “This is not the first bad freeze they’ve done. And it won’t be the last. No accountability. No responsibility. No recourse.”
Mert Mumtaz, who founded RPC node provider Helius, shared similar apprehensions. “This is your 10th reminder that centrally issued stablecoins are not actually yours; they can be frozen, unlike cash,” he posted.
Jean Rausis, who co-founded the decentralized exchange platform Smardex, suggested the GENIUS stablecoin regulatory framework establishes infrastructure for a privately controlled central bank digital currency system.
He contended that centralized stablecoins grant issuers identical financial monitoring and asset-freezing capabilities as traditional CBDCs.
Former U.S. Representative Marjorie Taylor Greene had expressed comparable concerns in May 2025, characterizing regulated stablecoins under the GENIUS legislation as a “CBDC Trojan Horse.”
As of Wednesday evening, Circle has reversed one freeze with ZachXBT projecting additional reversals in the coming days.
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