Circle Froze 16 Operational Business Wallets Yesterday. For A Civil Case Nobody Can Name.
The stablecoin that markets itself on compliance just showed you exactly what that compliance is for. March 24, 2026 | 11 min read
Yesterday March 23rd, Circle froze the USDC balances of 16 hot wallets belonging to crypto businesses.
They are not hackers. Not sanctioned entities. Not North Korean state actors. They are businesses. Running operations. Processing transactions for users.
ZachXBT flagged it this morning. He spoke with one of the affected companies directly. They told him it was connected to an ongoing US civil case whose details have not been disclosed. He reviewed the onchain activity. His assessment: a basic review makes it obvious these are operational wallets. The businesses named in his Telegram post include Ranj.gg, Clank.gg, Whale.gg, Goated.com, 500 Casino, Pepperstone, FXPro, HeroFx, and AMarkets. Exchanges, casinos, forex platforms. No apparent connection to each other.
Their business operations are now impacted. Circle, their lawyer, the forensics firm, and a judge are involved in something that none of these companies have been publicly told the full details of.
ZachXBT’s line was sharp: “You fail to protect users during actual incidents yet respond to a request riddled with errors.”
That sentence is the whole story. But to understand why it matters, you need the full timeline.
What The Freeze Function Actually Is
Before getting into the pattern, it is worth being precise about the mechanics.
USDC is not like Bitcoin or Ethereum. It is a token built on top of blockchains that contains a blacklist function baked directly into its smart contract. Circle holds the admin keys. When they add an address to the blacklist, that address cannot send or receive USDC. The balance does not disappear. It just becomes permanently inert until Circle removes it from the list.
There is no appeal window. There is no automatic notification. There is no minimum threshold. Circle can freeze one dollar or one hundred million dollars. They can act on a government request, a court order, their own internal assessment, or in theory anything they deem sufficient reason. The terms of service grant them broad discretion.
This architecture was not a secret. It was a design decision. Circle built it this way and marketed it as a feature. The pitch to regulators and institutions was always: we are the responsible stablecoin. We have controls. We can act when required.
The freeze function has existed since USDC launched. It has been visible in the contract code for anyone willing to look. Crypto researchers flagged it as a centralization risk from day one. The response from Circle and its institutional backers was always some version of: that power exists to protect the ecosystem, not to harm ordinary users.
Five years of incidents later, the pattern says something different.
What nobody asked loudly enough until ZachXBT kept pointing it out is: required by whom? And who decides when an error-riddled request is sufficient justification to bring down sixteen businesses in a single afternoon?
This Is Not The First Time
ZachXBT has been raising this specific complaint about Circle for over a year. Each incident follows the same shape.
In February 2025, the Bybit hack moved $1.5 billion out of the exchange. North Korea’s Lazarus Group was behind it. On-chain traces showed USDC landing in specific addresses almost immediately. ZachXBT flagged them publicly and went directly at Jeremy Allaire, Circle’s co-founder, asking him to act. Other platforms moved fast. ThorChain blacklisted addresses. FixedFloat froze stablecoins. Coinex and Bitget moved. Circle sat on its hands while the addresses remained live and the Lazarus Group funds kept moving.
A few months later, ZachXBT came back with something worse.
In July 2025, he published findings showing that North Korean IT workers, the ones running fake tech jobs inside legitimate companies to funnel money to the Kim regime, were using USDC as their primary payment rail. Not USDT. Not ETH. USDC. The clean one. He said he could point to eight figures in recent volume. His exact words: “They currently do nothing to detect / freeze the activity while boasting about compliance.”
Circle did not respond publicly.
That same month, Circle filed for a national bank charter in the United States.
October 2025. Coinbase reports a theft. Circle moves to freeze four EVM addresses it says are linked to the stolen funds. ZachXBT looks at the addresses. The wallets held DAI, not USDC. Circle had frozen the wrong asset in the wrong wallets. He called it one of the most useless freezes he had ever seen.
January 2026. A theft tied to SwapNet users. Over three million dollars in USDC sitting in the original theft address on Base for more than eight hours without intervention. ZachXBT called Circle a bad actor and asked a question that landed hard in the builder community: “Why should anyone continue building on $USDC when you never take care of your users as a centralized stablecoin issuer?”
And now today. Sixteen operational business wallets. Frozen for a civil case whose details remain undisclosed. Wallets that any analyst with basic tools could identify as active operational infrastructure in minutes.
Five incidents. One pattern.
The Compliance Model Runs One Direction
The clearest way to understand Circle’s actual behavior is to look at when they move fast versus when they don’t.
When the US Treasury issued sanctions against Tornado Cash in 2022, Circle moved immediately. They froze over 75,000 USDC held by wallets connected to the mixer within hours of the announcement. No hesitation. No delay. No public deliberation about whether the request was properly scoped.
When a court order came in connected to the LIBRA memecoin case in May 2025, Circle froze approximately 57 million dollars in USDC. Fast. Clean. Done.
When an unnamed civil case produced a request that ZachXBT described as “riddled with errors,” Circle froze sixteen business wallets anyway.
When North Korean state hackers were actively laundering through USDC for months with visible on-chain traces, Circle did nothing until researchers applied public pressure.
When three million dollars in freshly stolen USDC sat at the original theft address for eight hours, Circle needed to be shamed into action.
The difference between these two categories is not the severity of the harm. The Bybit hack was $1.5 billion. The DPRK payment network moved eight figures. Those are not small incidents. The difference is who is asking. Government authority produces rapid response. Victims waiting for Circle to do the right thing on their own initiative tend to wait a long time.
According to data from AMLBot, Circle has blacklisted around 372 addresses since launching USDC. Tether, which institutional crypto never misses an opportunity to criticize, has frozen assets across more than 2,500 addresses totaling roughly 1.6 billion dollars. It works with over 275 law enforcement agencies. Circle has fewer blacklisted addresses, slower response times on victim-side incidents, and a communications team that says the word compliance constantly.
The comparison is uncomfortable because the industry spent years telling itself that Tether was the shady one and Circle was the clean one. The data does not straightforwardly support that framing.
What The Legislation Actually Does And Doesn’t Do
I have covered both major pieces of stablecoin legislation in depth and neither of them fixes this.
The GENIUS Act, which passed into law in 2025, requires all stablecoin issuers to have the technical capability to seize, freeze, or burn payment stablecoins when legally ordered. Circle already had that capability before the law passed. What the GENIUS Act codified is the obligation to comply with lawful government orders. What it did not create is any reciprocal obligation to act on behalf of ordinary users or businesses harmed by theft or errors.
The CLARITY Act is the broader crypto market structure bill that has been sold to the crypto community as its regulatory breakthrough. Today the stock market got a look at new legislative text and did not like what it saw. The proposal would prohibit platforms from offering yield on stablecoins directly or indirectly. Circle’s stock dropped roughly 18% in a single session as investors priced in what that means for the company’s revenue model.
The CLARITY Act also does not create any mechanism for users or businesses harmed by Circle’s freeze decisions to seek recourse. It establishes rules about what regulators can do. It does not establish rules about what Circle must do when sixteen operational business wallets get frozen based on a request a basic onchain review would flag as erroneous.
Both bills move power toward regulated issuers and their government counterparts. Neither moves any protection toward you.
Regulated For Whom
USDC is not a neutral financial instrument.
It is a dollar-pegged token that runs on public blockchains and answers to a private company that answers to US regulators. That is not inherently wrong. There are legitimate arguments for regulated stablecoins with freeze functions. The ability to claw back stolen funds, freeze sanctioned entities, and comply with court orders is genuinely useful infrastructure.
But that infrastructure needs to be understood for what it is rather than what it is marketed as.
The pitch is: transparent, fully reserved, regulated. What they leave out is that regulated means the regulation runs in one direction. Toward the government. When Circle moves fast, it is because someone with authority asked them to. When Circle moves slow, or gets it wrong, or freezes the wrong asset in the wrong wallets entirely, there is no appeals process. There is no customer service line that fixes your frozen operational business wallet before the end of the trading day. There is no SLA for victims.
ZachXBT is not anti-Circle. He has said publicly he trusts Circle more than several other issuers. That actually makes his sustained criticism harder to dismiss. He is not a reflexive Circle hater running a hit campaign. He is a researcher who keeps tracing funds, keeps finding Circle failing to act when victims need them, and keeps saying it publicly because nobody else with his visibility is willing to.
He is not saying Circle is corrupt. He is saying Circle has the tools, can see the problem, and chooses not to act unless legally compelled. And when legally compelled by a civil case with errors in the request, apparently acts anyway without checking the onchain data first.
That is not a compliance failure. That is a policy choice. And it is a policy choice that affects every builder, business, and user who has built on USDC under the assumption that the issuer would use its powers responsibly in both directions.
The developer community built on USDC because Circle promised a stable, compliant, trustworthy foundation. Hundreds of protocols, payment rails, and businesses have integrated USDC as their primary dollar-denominated asset precisely because it was supposed to be the safe choice. When the safe choice freezes your operational wallets based on a faulty civil request with zero prior notice and zero recourse, the cost is not theoretical. It lands on your P&L today.
The Stock Crash Tells You Something
As of this morning, Circle’s stock is down roughly 18% in a single session. Three weeks ago the stock had more than doubled on the narrative that USDC was becoming the backbone of regulated digital finance. Analysts were raising price targets. The GENIUS Act tailwind was being priced in. Circle was being called the compliant alternative that institutions could actually touch.
Today that narrative is cracking on two fronts simultaneously.
The legislative front: new CLARITY Act text shows the bill would prohibit stablecoin yield, directly attacking Circle’s revenue model and the institutional demand story. The same CLARITY Act that was being sold to the crypto community as a regulatory win is now showing its fine print in a way the market is repricing in real time.
The trust front: the same day the stock crashes on regulatory news, ZachXBT is posting about sixteen innocent business wallets frozen on a faulty request. It is not that the market is pricing in ZachXBT’s tweet. It is that both stories are pointing at the same underlying thing. Circle’s value proposition rests on a compliance narrative. When the compliance narrative frays from two directions in the same morning, the repricing is fast.
Coinbase dropped over 8% in the same session as a direct consequence. Circle’s institutional partners are not insulated from what happens to the trust story around USDC.
The sixteen businesses frozen yesterday are not watching Circle’s stock price. They are trying to figure out how to process transactions today. That is the actual cost of this policy choice. Not a percentage drop in a share price. Operations down. Revenue interrupted. No explanation. No timeline. No recourse.
The Answer Is Becoming Clearer
Every time ZachXBT posts another thread pointing at Circle, the same cycle plays out. Crypto community reacts. Circle says little or nothing. News cycle moves on. Stock keeps going up. Until today it did, anyway.
Your USDC sits on a blockchain where Circle can freeze any address at any time for any reason they consider sufficient. The question is not whether they can. You already know they can. The GENIUS Act just made the legal framework around that capability explicit.
The question you should ask yourself is not technical. It is political. Who is Circle actually accountable to? When they make these kind of moves, who asked them to? When they move slow or not at all, whose interests are they serving?
Based on patterns across five incidents now, the answer is consistent with all of them. They move when power asks them to. When victims need them to move on their own initiative, the response is typically slow, absent, or in today’s case, applied to the wrong wallets entirely.
The sixteen businesses frozen for a civil case nobody can name are the latest data point in that pattern.
And I am sure they will not be the last.
If this investigation was useful, share it with someone who holds USDC and hasn’t thought about this.
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What’s your read on Circle? Do you think centralized stablecoin issuers should face legal liability when freeze decisions harm innocent businesses? Drop it in the comments.