Circle freezes $12.6 million of USDC linked to privacy protocol Zama
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The $12.6 million in USDC was likely frozen in connection with an ongoing but unrelated civil court case, according to onchain sleuth ZachXBT.
Key facts
- The exact reason for the freeze is “unclear,” he said, adding that wallets linked to the Overnight Finance decentralized finance (DeFi) protocol deposited $12.4 million into the Zama protocol
- He later added that Circle failed to freeze about $420 million in 15 separate cases involving fraudulent transactions or funds stolen through crypto hacks since 2022
- These incidents included the failure to freeze $232 million in stolen user funds from the April 2026 Drift Protocol hack, despite having a six-hour window to act, he said
- The $12.6 million in USDC was likely frozen in connection with an ongoing but unrelated civil court case, according to onchain sleuth ZachXBT
Summary
Stablecoin issuer Circle froze $12.6 million in USDC dollar-pegged tokens linked to privacy protocol Zama’s confidential USDC smart contract on Saturday, according to onchain sleuth ZachXBT. The smart contract is “publicly labeled” on block explorers and the privacy protocol’s technical documentation, ZachXBT said. The exact reason for the freeze is “unclear,” he said, adding that wallets linked to the Overnight Finance decentralized finance (DeFi) protocol deposited $12.4 million into the Zama protocol on May 11, 2026. “From my understanding, the Zama team does not appear to have been notified of the Circle freeze prior,” he said.