- Onchain investigator ZachXBT claims stablecoin issuer Circle incorrectly froze 16 USDC wallets linked to a sealed U.S. civil case.
- The frozen wallets belonged to exchanges and businesses unrelated to the case, a move critics call a failure of due diligence.
- The incident has reignited debates about centralized stablecoins being censorship-resistant and their relationship to proposed CBDCs.
Stablecoin giant Circle has come under fire for allegedly wrongfully freezing 16 wallets containing its USDC token, according to security researcher ZachXBT. The wallets, related to a sealed U.S. civil case, belonged to crypto exchanges, online casinos, and Forex businesses.
ZachXBT said an analyst could have identified these as legitimate operational wallets. He called this freeze “the single most incompetent freeze I have seen” in a separate post.
Consequently, this action highlights the centralized control critics warn about. Mert Mumtaz of Helius said it demonstrates that centrally-issued stablecoins are not truly user-owned assets.
Meanwhile, industry figures argue this power mirrors that of a central bank digital currency. Jean Rausis co-founder of Smardex, stated regulated stablecoins under the GENIUS framework create a privately-managed CBDC.
This viewpoint was echoed by former lawmaker Marjorie Taylor Greene in May 2025. She previously called regulated stablecoins a “CBDC Trojan Horse.”
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