Zama

Overnight

ZachXBT

Million

USDC

<p>More than $12.6 million worth of USDC has been frozen after Circle blacklisted the smart contract behind Zama’s confidential USDC (cUSDC) on Ethereum. The move came after a wallet linked to Overnight Finance reportedly deposited millions into the protocol.<br><br>Community members are questioning why Circle froze the entire cUSDC contract rather than targeting only the wallet allegedly connected to the ongoing dispute.</p>
<h2 id="h-why-did-circle-freeze-zama-s-cusdc-contract" class="wp-block-heading">Why Did Circle Freeze Zama’s cUSDC Contract?</h2>
<p>The issue first came to light after blockchain investigator <a href="https://x.com/waleswoosh/status/2060637552600834123" rel="noopener noreferrer nofollow">ZachXBT flagged</a> the blacklist action on Saturday.</p>
<p>According to his findings, Circle froze Zama’s cUSDC contract, effectively locking approximately $12.6 million in USDC. The freeze may be connected to a wallet that deposited around $12.4 million USDC into the protocol on May 11.</p>
<p>The wallet is reportedly linked to Overnight Finance, a project that has recently faced accusations from some holders who claim they were affected by a rug pull. However, no official confirmation has been provided linking the frozen funds directly to any wrongdoing.</p>
<p>Further blockchain analysis showed the address had participated in an Overnight Finance governance vote before the freeze occurred.</p>
<h2 id="h-zama-received-no-notice-before-the-freeze" class="wp-block-heading">Zama Received No Notice Before The Freeze</h2>
<p>Zama co-founder Rand Hindi <a href="https://x.com/randhindi/status/2060653127758397886" rel="noopener noreferrer nofollow">said</a> the team believes its protocol may have been caught in the middle of a separate legal dispute.</p>
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
 <p>“It seems our confidential USDC contract was caught in the crossfire of another case,” adding that the team is actively investigating the situation.</p>
</blockquote>
<p>As of now, the frozen contract still holds roughly $12.6 million in USDC, with no funds leaving the address since the blacklist was applied.</p>
<p>Perhaps more concerning for users is that Zama reportedly received no advance notice before the freeze was executed.</p>
<h2 id="h-why-is-this-important-for-crypto-users" class="wp-block-heading">Why Is This Important for Crypto Users?</h2>
<p>The incident shows a growing concern surrounding centralized stablecoins. While USDC operates on public blockchains, Circle retains the ability to freeze assets and blacklist addresses when required by legal, regulatory, or compliance actions.</p>
<p>Critics argue that the latest case indicates how those powers can sometimes affect users who are not directly involved in a dispute.</p>
<p>Defi researcher <a href="https://x.com/Zun2025/status/2060656308110626842" rel="noopener noreferrer nofollow">Zun questioned</a> why Circle froze the entire cUSDC contract instead of targeting only the wallet allegedly linked to Overnight Finance.</p>
<p>The controversy also revives concerns raised earlier this year when Circle froze 16 wallet addresses and later reversed the action following community backlash.</p>
<h2 id="h-what-happens-next" class="wp-block-heading">What Happens Next?</h2>
<p>At the moment, holders of cUSDC have no clear timeline for when the frozen funds could be released.</p>
<p>The outcome will likely depend on the ongoing investigation and whether the blacklist was applied because of legal action tied to Overnight Finance or another unrelated dispute.<br><br>Meanwhile, Zama co-founder Rand said that they will update with more info asap.</p>

Circle Freezes $12.6 Million in Zama’s cUSDC Contract: ZachXBT

Table of Contents

CoinPedia News

Other articles published on May 30, 2026

Join our free newsletter for daily crypto updates!