- Circle froze 16 USDC wallets tied to exchanges and crypto firms.
- ZachXBT said wallets showed normal use, not linked to crime cases.
- Circle begins unfreezing wallets but gives no clear explanation yet.
Circle, the company behind the USDC stablecoin, has begun reversing a controversial freeze of 16 USDC wallets tied to crypto businesses. The action triggered backlash across the crypto community, especially after investigators found no clear links to criminal activity. The partial reversal has raised fresh concerns about stablecoin control.
Circle Freezes 16 USDC Wallets Linked to Businesses
On March 24, Circle froze 16 hot wallets belonging to various crypto businesses, including exchanges, online casinos, and forex firms. The freeze was linked to a sealed U.S. civil court case.
No public warning was given, and affected businesses suddenly found themselves unable to process payments or access their own funds.
On-chain investigator ZachXBT criticized the move, stating that wallet activity appeared normal. According to his review, the addresses showed routine business transactions rather than suspicious behavior.
The freeze also coincided with sharp market reactions. Circle’s stock dropped significantly during the same period, while broader sentiment around centralized stablecoins weakened.
Circle Begins Unfreezing Wallets
Within hours of ZachXBT going public, Circle unfroze the first wallet, belonging to a platform called Goated. More unfreezes are expected to follow. But the damage is done, and the silence from Circle’s leadership, including CEO Jeremy Allaire, has frustrated many in the community.
Source: X
“The crypto community needs answers about why this overreach ever occurred to begin with,” Zach said.
Stablecoin Control Concerns Grow
Security researcher Tay explained that under Circle’s current process, a U.S. court order alone is enough to freeze funds, even in a civil case. There is no requirement to verify whether the wallets are actually linked to wrongdoing. Once frozen, victims have almost no easy way to fight back, especially when the case is sealed from the public.
Some in the community warn that this could set a dangerous precedent, with stablecoins potentially being used to settle everyday legal disputes rather than just tackling hacks and sanctions.
For now, Circle has issued no statement, and the crypto world is watching closely.
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Source: https://coinedition.com/circle-begins-unfreezing-usdc-wallets-after-controversial-mass-freeze/
