- Circle has unfrozen five of 16 business wallets containing its USDC stablecoin that were blocked last week.
- The initial freeze was tied to a sealed New York civil case, disturbing activity for multiple unrelated firms.
- This is the latest in a series of USDC freezes by Circle to comply with legal and regulatory demands.
- Blockchain investigator ZachXBT called it “potentially the single most incompetent freeze I have seen.”
In a controversial compliance move, Circle Internet Group partially reversed a major freeze of its USDC stablecoin over the weekend, after blocking funds in 16 operational business wallets last week.
Blockchain investigator ZachXBT reported on Saturday that five of the original 16 wallets had been restored. However, the freeze initially disrupted user withdrawals from centralized exchanges to the affected addresses.
The action was linked to a sealed New York civil case, according to a conversation ZachXBT had with an affected firm. Consequently, no public details are available for case number 26-cv-2327.
ZachXBT, often called ‘crypto’s own Sherlock,’ said the incident was notably flawed. He identified attorney Aaron Nathan as counsel for the plaintiff in the sealed case.
This incident adds to Circle‘s history of freezing USDC in response to authorities. For example, the company froze roughly $100,000 in 2020 and blacklisted Tornado Cash addresses in 2022.
More recently, Circle froze about $57 million last May tied to a memecoin scam case.
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