Stablecoin issuer Circle froze $12.6 million in USDC dollar-pegged tokens linked to privateness protocol Zama’s confidential USDC sensible contract on Saturday, in response to onchain sleuth ZachXBT.
The sensible contract is “publicly labeled” on block explorers and the privateness protocol’s technical documentation, ZachXBT stated.
The precise cause 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 Might 11, 2026. He stated:
“In a single day Finance held a governance vote lately 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 beneath hearth for failing to freeze funds following main hacks of crypto platforms, and freezing wallets of authentic crypto initiatives and protocols with out giving these initiatives prior discover.
Associated: Tether freezes over $500M of USDT in 30 days, BlockSec information reveals
Circle comes beneath hearth for freezing authentic consumer funds, however not stolen crypto
In March, ZachXBT accused Circle of “wrongfully” freezing 16 stablecoin wallets linked to on-line casinos and legit crypto exchanges.
The wallets have been frozen in reference to ongoing civil court docket circumstances in the USA; nevertheless, the companies and wallets “don’t seem associated in any respect,” he stated.
He later added that Circle didn’t freeze about $420 million in 15 separate circumstances involving fraudulent transactions or funds stolen via crypto hacks since 2022.
A listing of 15 incidents since 2022, wherein Circle didn’t freeze funds, in response to 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 via Circle’s Cross-Chain Switch Protocol (CCTP), a bridge that enables belongings to maneuver between totally different blockchain networks.
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