Circle freezes $12.6M of USDC linked to privacy protocol Zama
Circle froze $12.6 million in USDC tied to Zama’s confidential USDC smart contract, prompting questions because the contract is publicly labeled and the reason for the freeze is unclear. Onchain data showed wallets linked to Overnight Finance deposited $12.4 million into the Zama protocol on May 11, 2026. ZachXBT said this sets a troubling precedent because funds were commingled with Zama users, and Zama reportedly was not notified before the freeze. The move added to criticism that Circle freezes legitimate project funds without warning, while allegedly failing to act on large amounts tied to hacks and fraud. Earlier, ZachXBT accused Circle of wrongly freezing wallets linked to casinos and exchanges, and of not freezing hundreds of millions in stolen or fraudulent funds in multiple incidents since 2022.
