Stablecoin issuer Circle froze $12.6 million in USDC dollar-pegged tokens linked to privateness protocol Zama’s confidential USDC good contract on Saturday, in line with onchain sleuth ZachXBT.
The good contract is “publicly labeled” on block explorers and the privateness protocol’s technical documentation, ZachXBT stated.
The precise purpose for the freeze is “unclear,” he stated, including that wallets linked to the In a single day Finance decentralized finance (DeFi) protocol deposited $12.4 million into the Zama protocol on Could 11, 2026. He stated:
“In a single day Finance held a governance vote not too long ago to distribute treasury funds after holders alleged the staff was rug-pulling. Regardless, it is precedent-setting to unilaterally freeze the contracts or addresses of a protocol the place funds have been commingled with Zama customers.”
Supply: ZachXBT
“From my understanding, the Zama staff doesn’t seem to have been notified of the Circle freeze prior,” he stated. Cointelegraph reached out to Circle however didn’t obtain a response by the point of publication.
The corporate has come below hearth for failing to freeze funds following main hacks of crypto platforms, and freezing wallets of respectable crypto initiatives and protocols with out giving these initiatives prior discover.
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Circle comes below hearth for freezing respectable consumer funds, however not stolen crypto
In March, ZachXBT accused Circle of “wrongfully” freezing 16 stablecoin wallets linked to on-line casinos and bonafide crypto exchanges.
The wallets had been frozen in reference to ongoing civil court docket instances in the US; nonetheless, the companies and wallets “don’t seem associated in any respect,” he stated.
He later added that Circle did not freeze about $420 million in 15 separate instances involving fraudulent transactions or funds stolen by way of crypto hacks since 2022.
An inventory of 15 incidents since 2022, during which Circle did not freeze funds, in line with ZachXBT. Supply: ZachXBT
These incidents included the failure to freeze $232 million in stolen consumer funds from the April 2026 Drift Protocol hack, regardless of having a six-hour window to behave, he stated.
Following the incident, customers filed a category motion lawsuit in opposition to Circle for failing to freeze the funds, which flowed by way of Circle’s Cross-Chain Switch Protocol (CCTP), a bridge that enables property to maneuver between completely different blockchain networks.
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