Circle Freezes 16 USDC Wallets, Reverses Some Amid Criticism

Circle, the issuer of the USD Coin (USDC) stablecoin, froze funds in 16 wallets on March 24, 2025, citing involvement in a sealed civil lawsuit, only to partially reverse the action days later amid criticism from blockchain investigator ZachXBT and concerns over transparency and justification.

The freezes affected addresses linked to cryptocurrency exchanges, online casinos, and foreign currency businesses, immobilizing assets totaling hundreds of thousands of USDC. According to onchain analysis by ZachXBT, who reviewed transaction histories, the wallets showed no signs of illicit activity, such as mixing services or connections to known suspicious addresses. Instead, patterns indicated routine operations, including bridging and settlement flows. "In my five-plus years of investigations, this might be the most incompetent freeze I've ever seen," ZachXBT stated on social media platform X, where he has nearly a million followers.

Circle's decision stemmed from compliance checks, including Know Your Transaction (KYT) protocols and a request tied to the civil case, though details remain sealed and no public evidence of wrongdoing was provided. The company, which controls USDC...