Onchain investigator ZachXBT says stablecoin issuer Circle wrongfully froze 16 wallets tied to a sealed U.S. civil case. According to ZachXBT, the wallets belonged to crypto exchanges, online casinos and foreign-currency businesses that “do not appear related at all.” He added an analyst with basic tools could have identified within minutes that these were operational business wallets given the thousands of transactions they process.
ZachXBT called the action “potentially the single most incompetent freeze I have seen,” and criticized the practice of outsourcing freeze decisions to a federal judge rather than maintaining an internal review process. He said Circle had “zero basis” to freeze the fiat‑pegged tokens associated with the sealed case.
Cointelegraph reached out to Circle for comment but had not received a response by publication.
Critics say the incident highlights a broader concern: centralized stablecoins’ ability to be frozen undermines cryptocurrency’s 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 that provisions in the GENIUS stablecoin regulatory framework could pave the way for privately managed central bank digital currencies (CBDCs). He said centralized stablecoins give issuers surveillance and freezing powers similar to a CBDC. Former U.S. lawmaker Marjorie Taylor Greene voiced a related concern in May 2025, calling regulated stablecoins under GENIUS a “CBDC Trojan Horse.”
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