Circle has blacklisted Zama's cUSDC contract on Ethereum, preventing the transfer of approximately $12.6 million in USDC from the contract. On-chain investigator ZachXBT believes this freeze may be related to a wallet that previously deposited a large amount of funds into the protocol, and the incident has once again sparked discussions in the market about the authority to freeze centralized stablecoins.
The freeze occurs at the contractual level.
According to ZachXBT, what was frozen was Zama's confidential USDC (cUSDC) smart contract, not a single user address. After the blacklist took effect, approximately $12.6 million in USDC in the contract was locked, and the funds have not been transferred out since.
On-chain records show that a wallet deposited approximately $12.4 million USDC into the protocol on May 11. This is widely believed to be the direct reason why Circle took action to freeze funds.
The address in question points to Overnight Finance.
The report mentions that the aforementioned address is believed to be linked to Overnight Finance. This project has recently faced accusations from some holders alleging involvement in a "rug pull" controversy. However, there is currently no publicly confirmed information proving that the frozen funds themselves have been found to be illegal or irregular.
Further on-chain analysis revealed that the address had participated in a governance vote at Overnight Finance before being frozen. This detail reinforces the outside world's judgment that the two are related, but it is still not enough to constitute a definitive conclusion on its own.
Zama stated that he did not receive prior notification.
Zama co-founder Rand Hindi stated that the team believes their protocol may be embroiled in a separate dispute. He described the cUSDC contract as "caught in the middle of another case."
He also stated that the team received no prior notice before the freeze was implemented and is currently investigating the specific reasons. For cUSDC holders, the biggest issue right now is when the funds will be unfrozen; there is currently no clear timetable.
The community questioned the excessive scope of the freeze.
Following the incident, some DeFi researchers focused on Circle's handling of the situation. The point of contention is why, if the issue only involved a single suspicious wallet, the entire cUSDC contract was blacklisted instead of the specific address.
- Frozen Item: Zama's cUSDC Contract
- Frozen amount: Approximately US$12.6 million USDC
- Deposits at key address: Approximately US$12.4 million USDC
This also exposes a real characteristic of centralized stablecoins: although USDC circulates on public blockchains, the issuer still retains the ability to freeze assets and blacklist addresses, and such operations are usually related to legal, regulatory or compliance requirements.
Additional information:The report also mentioned that Circle froze 16 wallet addresses earlier this year, but subsequently reversed the action after a backlash from the community. Whether a similar adjustment will occur in this case remains to be seen.
