Circle Freezes $12.6M USDC Linked to Zama Privacy Protocol
Circle Freezes $12.6M USDC Linked to Zama Privacy Protocol
https://www.kucoin.com/news/flash/circle-freezes-12-6m-usdc-linked-to-zama-privacy-protocol
Publish Date: 2026-05-30 16:49:00
Source Domain: www.kucoin.com
Circle has reportedly frozen about $12.6 million worth of USDC tied to Zama’s confidential contract, a move observed by on-chain researcher ZachXBT. The USDC in question is associated with Zama’s privacy-focused protocol, and the contract is publicly labeled on block explorers as well as in the protocol’s technical documentation. The exact rationale behind the freeze remains unclear, even as researchers note a notable around-the-calance transaction from Overnight Finance into the Zama ecosystem earlier this month.
According to ZachXBT, the Zama contract’s status is well-known in on-chain tooling, and the freeze appears to have occurred despite the lack of an explicit explanation from Circle. ZachXBT pointed to a May 11, 2026 deposit of approximately $12.4 million into the Zama protocol from Overnight Finance, a governance-friendly DeFi platform whose treasury movements have drawn scrutiny in related discussions. The broader point, as ZachXBT framed it, is that unilateral freezes where funds are commingled with a separate protocol’s users set a controversial precedent for custodians acting over interconnected contracts.
“Overnight Finance held a governance vote recently to distribute treasury funds after holders alleged the team was rug-pulling. Regardless, it’s precedent-setting to unilaterally freeze the contracts or addresses of a protocol where funds have been commingled with Zama users.”
Circle confirmed to Cointelegraph that it is reviewing the matter, but the company had not provided a response by the time of publishing. The situation adds to a long-running critique of Circle’s approach to freezing funds, as opposed to simply freezing wallets tied to hacks or to projects the firm deems at fault—an issue that has repeatedly resurfaced in recent coverage.
Circle’s broader track record on asset freezes has become a flashpoint for critics who say the company has, at times, moved too quickly to lock funds linked to legitimate projects while…
