Open Source · Circle · Ethereum · California · The Block
Court-ordered Circle freeze traps $12.6 million in Zama cUSDC contract amid Overnight Finance suit
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Circle froze roughly $12.6 million in USDC early Saturday morning by blacklisting the Ethereum contract behind open-source cryptography firm Zama's confidential USDC token, dragging a privacy protocol into a dispute it apparently had no direct part in.
Key facts
- Ermilov built Overnight Finance, a DeFi yield platform that issued the USD+ stablecoin and the OVN governance token, following an $850,000 pre-seed raise led by Hack VC in Feb. 2022
- Patagon pursued a similar strategy against the Aragon Association, where the DAO voted to fund a lawsuit against its own founding team, as The Block previously reported, and routed $300,000 in USDC
- OVN holders later initiated a vote on May 4, 2026, to liquidate the treasury and pay themselves out
- Before the vote crossed a majority on May 11, the lawsuit alleges Ermilov shifted more than $15.77 million out of the treasury wallets and into a new address
Summary
The blacklist hit the cUSDC contract at 1:08 a.m. Rand Hindi, co-founder and CEO of Zama, said on X that the company was looking into the freeze. That case is a class action suit filed May 28 in the U.S. District Court for the Northern District of California. Ermilov sold OVN beginning in Sept. 2023 by promising holders a pro rata claim on the treasury and the right to vote on what happened to it, the complaint says, quoting a Nov. 6, 2024 Discord message in which Ermilov wrote "you can buy 51% of OVNs and vote to have distributed.