TLDR
- Circle restricted access to 16 USDC wallets associated with exchanges, online gaming platforms, and currency services
- Blockchain investigator ZachXBT labeled the action as “the single most incompetent freeze” in over five years of investigative work
- The restrictions stem from a sealed U.S. civil lawsuit, with no disclosure provided to impacted entities
- One wallet belonging to Goated.com, containing 130,966 USDC, has been restored
- The controversy has sparked fresh discussions about centralized stablecoins and their vulnerability to arbitrary freezing
Stablecoin issuer Circle restricted 16 USDC wallets belonging to operational businesses this week, triggering intense backlash from cryptocurrency community members. The affected wallets were connected to cryptocurrency exchanges, digital gaming platforms, and international currency exchange services.
Blockchain sleuth ZachXBT was among the first to bring attention to the matter. According to his findings, the impacted businesses showed no apparent connection to each other.
The investigator noted that the freeze was linked to a sealed U.S. civil lawsuit. Due to the confidential nature of the legal proceedings, no justification was provided to the wallet owners.
The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses.
Aaron Nathan from Willkie Farr is the unknown plaintiffs lawyer.
The expert witness is liable.
The judge is liable.
Circle is liable.In my 5+ yrs of…
— ZachXBT (@zachxbt) March 25, 2026
“The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses,” ZachXBT stated on X.
He expressed strong disapproval of Circle’s approach. “In my 5+ years of investigations, it could potentially be the single most incompetent freeze I have seen,” he declared.
The investigator emphasized that anyone using fundamental blockchain analysis tools could have determined within minutes that these were functioning business wallets. The addresses displayed thousands of transactions, clearly indicating their commercial operations.
Circle had not issued a statement or responded to media inquiries from several publications at press time.
One Wallet Unfrozen
By midweek, Circle had reversed the freeze on one of the 16 affected wallets. The address, labeled as “0x61f…e543,” is associated with the platform Goated.com. According to Arkham intelligence data, it presently contains 130,966 USDC.
ZachXBT indicated he anticipates additional wallets will be restored “in the near future.”
Stablecoin Control Under Scrutiny
This episode has drawn renewed focus to the operational mechanics of centralized stablecoins. Unlike physical currency or decentralized digital assets, stablecoins issued by corporations such as Circle are subject to freezing without advance notice.
MetaMask security researcher Taylor Monahan 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, founder of RPC infrastructure provider Helius, reinforced this sentiment. “This is your 10th reminder that centrally issued stablecoins are not actually yours; they can be frozen, unlike cash,” he posted.
Jean Rausis, co-founder of decentralized exchange platform Smardex, suggested the GENIUS stablecoin regulatory framework establishes conditions for a privately controlled central bank digital currency system.
He contended that centralized stablecoins grant issuers identical financial monitoring and asset-freezing capabilities as a traditional CBDC.
Former U.S. Representative Marjorie Taylor Greene had advanced a comparable position in May 2025, characterizing regulated stablecoins under the GENIUS legislation as a “CBDC Trojan Horse.”
As of Wednesday, Circle has restored access to one wallet, with ZachXBT projecting additional reversals in the coming days.
