Stablecoin issuer Circle has frozen 16 wallets containing its USDC token in connection with a sealed U.S. civil legal case, according to onchain investigator ZachXBT. The investigator stated the wallets belonged to crypto exchanges, online casinos, and foreign currency businesses that were unrelated to the case, calling the action “the single most incompetent freeze” he has seen in five years. Critics argue such actions highlight the centralized control and censorship risks of regulated stablecoins.
Stablecoin issuer Circle wrongfully froze 16 wallets holding its USDC token due to an ongoing sealed civil legal case in the United States. Onchain investigator ZachXBT stated the affected wallets belonged to crypto exchanges, online casinos, and foreign currency exchange businesses. He said these operational wallets “do not appear related at all” to the legal matter and could have been identified with basic tools.
In a separate post, ZachXBT wrote that Circle had “zero basis” to freeze the tokens in this sealed case. “In my 5-plus years of investigations, it could potentially be the single most incompetent freeze I have seen,” he said. The action showcases the permissionless and censorship-resistant debate around centralized stablecoins.
Mert Mumtaz, founder of node provider Helius, responded by stating, “This is your 10th reminder that centrally issued stablecoins are not actually yours; they can be frozen, unlike cash.” Critics warn that regulated stablecoins grant issuers financial surveillance powers similar to a central bank digital currency. Former U.S. lawmaker Marjorie Taylor Greene previously argued such regulated stablecoins are a “CBDC Trojan Horse.”
