Stablecoin issuer Circle, the company behind USDC, wrongfully froze 16 wallets tied to a sealed U.S. civil case, onchain investigator ZachXBT said. The frozen wallets belonged to crypto exchanges, online casinos and foreign currency exchange businesses that “do not appear related at all,” he wrote, adding that “an analyst with basic tools could have identified, within minutes, that these were operational business wallets from the thousands of transactions they process.”
ZachXBT called the action “potentially the single most incompetent freeze I have seen,” blaming the practice of outsourcing freezing decisions to a federal judge rather than maintaining an internal review process. He said Circle had “zero basis” to freeze the fiat-pegged tokens tied to the sealed case.
Cointelegraph sought comment from Circle but did not receive a response by publication.
Critics say centralized stablecoins’ ability to be frozen undermines cryptocurrencies’ promise of permissionless, censorship-resistant money. Mert Mumtaz, founder of RPC node provider Helius, warned this is a reminder that “centrally issued stablecoins are not actually yours; they can be frozen, unlike cash.”
Jean Rausis, co-founder of decentralized trading platform Smardex, argued provisions in the GENIUS stablecoin regulatory framework pave the way for privately managed central bank digital currencies (CBDCs). He said centralized stablecoins grant issuers financial surveillance and freezing powers similar to a CBDC. Former U.S. lawmaker Marjorie Taylor Greene echoed this concern in May 2025, calling regulated stablecoins under GENIUS a “CBDC Trojan Horse.”
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