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- ZachXBT claims Circle froze multiple business wallets that appeared to belong to exchanges, casinos and foreign exchange services, not a single coordinated entity.
- The allegations have revived a familiar crypto debate around USDC censorship risk and the power stablecoin issuers have to freeze funds onchain.
Circle is facing fresh criticism from one of crypto’s best-known onchain sleuths, and the issue cuts straight to one of the market’s oldest tensions around centralized stablecoins.
ZachXBT says the frozen wallets looked like routine business infrastructure
According to ZachXBT, the wallets Circle froze did not appear to be part of the same operation. He said the addresses belonged to crypto exchanges, online casinos and foreign currency businesses, and argued that even a basic onchain review should have made that obvious.
His point was fairly blunt. These were not dormant wallets with unclear provenance, he suggested, but active operational addresses processing large volumes of transactions in the normal course of business. In his view, anyone using standard blockchain analysis tools could have identified that within minutes.
That is what makes the accusation sting. This is not a complaint about whether Circle has the power to freeze funds. It is a claim that the company may have used that power too loosely or without doing enough homework first.
The case reopens the old USDC control debate
In crypto terms, this lands on a very sensitive fault line. USDC is widely used because it is liquid, familiar and deeply integrated across exchanges, DeFi protocols and payment rails. But it also comes with an issuer that can blacklist wallets and immobilize tokens when it chooses or is compelled to do so.
That trade-off has always been part of the product, but incidents like this bring it back into focus fast. Traders and businesses may be comfortable with compliance-heavy stablecoins right up until an operational wallet gets frozen and access to working capital becomes a legal or investigative mess.
