The chain where your USDC is located can be frozen at any time by Circle for any reason it deems sufficient.
Article author: Strident Citizen
Article compilation, source: Chopper, Foresight News
On March 23, Circle froze the USDC balances in 16 cryptocurrency companies' hot wallets.
These addresses are not hackers, not sanctioned entities, nor North Korean state agencies. They are normal operating businesses, handling transactions for users.
On-chain analyst ZachXBT exposed this matter. After communicating directly with one of the affected companies, he learned that the freeze was related to an ongoing civil case in the U.S., but the details of the case have not been made public. He assessed that, with basic verification, it is clear that these are all operational wallets. The platforms he mentioned in Telegram include: Ranj.gg, Clank.gg, Whale.gg, Goated.com, 500 Casino, Pepperstone, FXPro, HeroFx, AMarkets. They cover exchanges, casinos, and forex platforms, with no obvious connections between them.
The business operations of these companies have been directly affected, but they have not been publicly informed of all the details.
ZachXBT's criticism hits the nail on the head: 'When something really goes wrong, you can't protect users, yet you respond rapidly to a flawed order.'
This sentence summarizes the core of the event. But to understand why it is so important, you need to know the complete timeline of events.
What exactly is the freezing function?
Before sorting out a series of events, it is necessary to clarify the mechanism.
USDC is completely different from Bitcoin and Ethereum. It is a token built on a public chain, with a blacklist function embedded in the smart contract. Circle holds the admin key. Once an address is added to the blacklist, it cannot send or receive USDC. The balance does not disappear, but will become permanently invalid until Circle removes it from the list.
This process has no appeal period, no automatic notifications, and no minimum amount limit. Circle can freeze 1 dollar or 100 million dollars. It can take action based on government requests, court orders, internal assessments, or any reason it deems 'sufficient'. The terms of service grant it vast discretion.
This framework has never been a secret, but a deliberate design choice. Circle was built this way and even promoted it as a feature. Its rhetoric to regulators and institutional clients has always been: we are a responsible stablecoin, we have control capabilities, and we can take action when necessary.
The freezing function has existed since USDC was launched, and the contract code is visible to everyone. Crypto researchers pointed out from day one that this is a centralization risk. And Circle and its institutional supporters' response has always been: this power is to protect the ecosystem, not to harm ordinary users.
Five years have passed, and the pattern presented by a series of events is completely another matter.
Until ZachXBT continuously named names, people finally began to loudly question: who is asking? And who decided that a flawed application was enough to paralyze 16 companies in one afternoon?
This is not the first time.
ZachXBT's accusations against Circle have been ongoing for more than a year. The pattern of each incident is identical.
In February 2025, Bybit exchange suffered a hacking attack, with 1.5 billion dollars stolen, behind it is the North Korean Lazarus Group. Clear on-chain traces showed USDC rapidly flowing into specific addresses. ZachXBT publicly exposed these addresses and directly called on Circle co-founder Jeremy Allaire to take action. Other platforms responded quickly: ThorChain blacklisted addresses, FixedFloat froze stablecoins, Coinex, and Bitget took action in succession. Only Circle remained indifferent, allowing the addresses to continue circulating and North Korean hacker funds to keep transferring.
Months later, ZachXBT brought even worse information.
In July 2025, the investigation results he published showed that North Korean IT professionals primarily used USDC as a payment channel. Not USDT, not ETH, but this 'cleanest' stablecoin. He pointed out that it involved transactions worth tens of millions of dollars and bluntly stated: 'They boast compliance while completely failing to monitor or freeze such activities.'
Circle has not made any public response. In the same month, Circle officially applied for a national bank charter in the United States.
In October 2025, Coinbase reported a theft. Circle immediately froze 4 EVM addresses, claiming they were related to the stolen funds. After checking, ZachXBT found that these wallets only contained DAI, and had no USDC at all. Circle froze the wrong assets in the wrong wallets. He called it one of the most meaningless freezing operations he had ever seen.
In January 2026, SwapNet users had 3 million USDC stolen, and the stolen USDC remained in the original Base chain address for over 8 hours, with Circle intervening not at all. ZachXBT directly called Circle a 'bad actor' and posed a heavy question to the developer community: 'As a centralized stablecoin issuer, you never take responsibility for users, who else should build applications on USDC?'
And then there is now. 16 normal business operation wallets were frozen due to an undisclosed civil case. Any analyst can determine within minutes using basic tools that these are active business infrastructures.
Five events, the same pattern.
The compliance system only operates in one direction.
The most intuitive way to understand Circle's real behavior is to compare when it acts swiftly and when it delays or is perfunctory.
In 2022, the US Treasury sanctioned Tornado Cash, and Circle froze over 75,000 related USDC addresses within hours, without hesitation.
In May 2025, under the court order of the LIBRA Meme coin case, Circle quickly froze about 57 million USDC.
In this case, a civil action application referred to by ZachXBT as 'full of loopholes', Circle still decisively froze 16 business wallets.
On the other hand:
North Korean state-level hackers have been blatantly laundering money through USDC for months, with clear on-chain traces, and Circle remained indifferent until researchers publicly pressured them.
3 million stolen USDC remained in the original address for 8 hours, Circle needed to be pressured by public opinion before it was willing to act.
The distinction is not in the magnitude of harm. Bybit was hacked for 1.5 billion, and North Korean funds amounting to tens of millions are no small matter. The distinction lies only in: who is asking. In the face of public authority, response is swift; in the face of victims waiting for help, proactive action is basically zero.
According to AMLBot data, since the launch of USDC, Circle has blacklisted approximately 372 addresses. In contrast, Tether, which has been criticized for its 'opacity', has frozen assets from over 2500 addresses, totaling around 1.6 billion dollars, cooperating with over 275 law enforcement agencies. In comparison, Circle has fewer blacklisted addresses, slower response times to victim events, and its communication team often emphasizes compliance.
The comparison is very awkward: the industry has been self-hypnotizing for years, Tether is a black box, Circle is a clear stream. But the data does not support this narrative.
Existing legislation has not solved the problem at all.
I have deeply studied two major stablecoin bills, and neither of them has addressed such issues.
(The GENIUS Act) requires all stablecoin issuers to have the technical capability to legally seize, freeze, and destroy tokens. Circle had already possessed this capability before the bill was passed. The bill specifies: there is an obligation to comply with legitimate government directives. But it did not establish any reverse obligation: that the issuer must take action when users or businesses encounter theft or wrongful freezing.
(The CLARITY Act) is promoted as a market structure bill for regulatory breakthroughs in the crypto industry. After the latest legislative text was exposed, the market reacted sharply: the proposal will prohibit platforms from directly or indirectly providing yields on stablecoins. Circle's stock price plummeted about 18% in a single day, leading investors to reprice its business model.
More crucially: the (CLARITY Act) also does not provide any recourse mechanism for users and businesses that suffer wrongful freezes. It only specifies what regulators can do, not what Circle must do when 16 operational wallets are frozen due to obviously problematic applications.
Both bills tilt power toward regulated issuers and their government partners, with no provision for protection for ordinary users.
Compliance, compliant with whom?
USDC is not a neutral financial tool.
It is a token pegged to the US dollar, operating on a public chain, answering to a private company that is in turn answering to US regulators. This in itself is not absolutely wrong. Supporting compliant stablecoins with freezing functions also has reasonable logic: retrieving stolen funds, freezing sanctioned entities, executing court orders, is indeed useful infrastructure.
But people must recognize its essence, rather than believe its marketing rhetoric.
The promotional tone is: transparency, full reserves, compliance. What is deliberately omitted is: compliance is only one-way aimed at the government.
Circle acts swiftly because there are powers demanding it; Circle acts slowly, misidentifies targets, and freezes wrong assets when there are no channels for appeals.
ZachXBT is not an anti-Circle figure. He has publicly stated that compared to many issuers, he trusts Circle more. Because of this, his continuous criticism is even harder to ignore. He is not a basher for the sake of bashing, but a researcher who tracks funds, constantly discovers Circle's inaction when victims need it, and dares to speak out.
He did not say Circle was corrupt. What he said was: Circle has the tools, sees the problems, but only acts when legally compelled. And when facing a flawed civil case order, it doesn't even check the on-chain data before executing.
This is not a compliance failure, this is a policy choice. And this choice affects all developers, businesses, and users building ecosystems on the assumption that 'issuers will be mutually responsible'.
The answer is becoming increasingly clear.
Every time ZachXBT posts about Circle, the same plot will repeat. The community discusses, Circle remains silent or perfunctory, the news heat dissipates, and the stock price continues to rise. At least until before today, that has been the case.
On this chain where your USDC resides, Circle can freeze any address at any time for any reason it deems sufficient.
The question is no longer whether 'it can or cannot', you already know it can. The GENIUS Act merely clarifies this framework of power.
What you should be asking is not a technical question, but a political question:
Circle Who is truly responsible to?
When it takes such actions, who is commanding it?
When it delays or fails to act, whose interests is it maintaining?
From the pattern of the five incidents, the answer remains consistent: respond swiftly to power directives, be slow and absent in actively assisting victims, and even, as in this case, completely incorrectly freeze targets.
These 16 companies frozen due to an unnamed civil case are just the latest node in this pattern. And it is almost certain that they will not be the last.