ZachXBT Calls Circle USDC Wallet Freeze “Most Incompetent” in Five Years of Investigations

TLDR

• Circle froze 16 USDC wallets linked to crypto exchanges, online casinos, and currency businesses
• Onchain investigator ZachXBT called it “the single most incompetent freeze” in his 5+ years of work
• The freezes are tied to a sealed U.S. civil court case, with no explanation given to affected businesses
• Circle has since unfrozen one wallet belonging to Goated.com, which held 130,966 USDC
• The incident has reignited debate about centralized stablecoins and their ability to be frozen without warning

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Circle froze 16 USDC wallets belonging to operating businesses earlier this week, sparking sharp criticism from the crypto community. The wallets were linked to crypto exchanges, online casinos, and foreign currency exchange businesses.

Onchain investigator ZachXBT was first to flag the issue. He said the businesses affected appeared to be completely unrelated to one another.

ZachXBT said the freeze was connected to a sealed U.S. civil court case. Because the case is sealed, no reason was given to the wallet holders.

The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses.

Aaron Nathan from Willkie Farr is the unknown plaintiffs lawyer.

The expert witness is liable.
The judge is liable.
Circle is liable.

In my 5+ yrs of…

— ZachXBT (@zachxbt) March 25, 2026

“The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses,” ZachXBT wrote on X.

He was highly critical of how Circle handled the situation. “In my 5+ years of investigations, it could potentially be the single most incompetent freeze I have seen,” he added.

ZachXBT pointed out that anyone with basic onchain tools could have identified within minutes that these were active business wallets. The wallets showed thousands of transactions, making their commercial nature clear.

Circle did not respond to requests for comment from multiple outlets at the time of publication.

One Wallet Unfrozen

By Wednesday, Circle had unfrozen one of the 16 wallets. The wallet, identified as “0x61f…e543,” belongs to the platform Goated.com. It currently holds 130,966 USDC, according to data from Arkham.

ZachXBT said he expects more wallets to be unfrozen “in the near future.”

Stablecoin Control Under Scrutiny

The incident has brought renewed attention to how centralized stablecoins work. Unlike cash or decentralized crypto assets, stablecoins issued by companies like Circle can be frozen at any time.

MetaMask security researcher Taylor Monahan said on X: “This is not the first bad freeze they’ve done. And it won’t be the last. No accountability. No responsibility. No recourse.”

Mert Mumtaz, founder of RPC node provider Helius, echoed this concern. “This is your 10th reminder that centrally issued stablecoins are not actually yours; they can be frozen, unlike cash,” he wrote.

Jean Rausis, co-founder of decentralized trading platform Smardex, said the GENIUS stablecoin regulatory bill lays the groundwork for a privately managed central bank digital currency to emerge.

He argued that centralized stablecoins give issuers the same financial surveillance and asset-freezing powers as a standard CBDC.

Former U.S. lawmaker Marjorie Taylor Greene had made a similar argument in May 2025, calling regulated stablecoins under the GENIUS bill a “CBDC Trojan Horse.”

As of Wednesday, Circle has unfrozen one wallet and ZachXBT says more restorations are expected soon.

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