Overnight, on the last day, several blockchain analysts and investigators, including ZachXBT and Specter, noticed something strange involving stablecoin issuer Circle. Yes, the firm has frozen USDC balances across nearly 80 operational business wallets, igniting wider attention in the sector.
In detail, USDC held in the wallets cannot be traded, transferred, or redeemed.
Nearly $6.6 million USDC withheld for some essential reasons
As blockchain analysts reported, around 80 wallet addresses holding approximately $6.6 million in USDC were frozen. Among them, 16 wallets were identified as “service wallets,” meaning wallets used for intermediaries or infrastructure.
In other words, these wallets are controlled by platforms or backend systems rather than individual crypto users. These service wallets now hold roughly $3.8 million in frozen USDC.
And it is quite evident why firms stabilize or freeze wallets. In fact, the frozen wallets are believed to be connected with illicit activities, compliance risks, or regulatory sanctions.
Circle’s technical control to freeze and previous similar incidents
Before we move forward, here is one thing that you should know. Circle has the technical controls on its USDC smart contracts. This access to control allows the platform to freeze specific wallets. Moreover, the stablecoin issuer has historically suspended several wallets; however, unlike Tether, Circle hasn’t acted quickly to freeze wallets.
According to blockchain investigator Specter, Circle appears to be more cautious and selective in freezing funds.
Alongside the chatter, Tether has also frozen 12 wallets allegedly linked to information technology workers of the Democratic Republic of Korea (DPRK). These wallets are reportedly tied to North Korean cybercriminals.
During the 2023-2025 period, Circle froze around 372 wallet addresses holding more than $109 million worth of USDC stablecoins. When the epic Libra memecoin scandal arose in May 2025, Circle suspended two wallets holding approximately $57 million USDC.
Circle’s move is unusual for blockchain investigator
For ZachXBT, Circle’s action is quite strange. He claims that the 16 frozen wallets are unrelated, which means that operational or innocent wallets might have been suspended. He also argues that the request to freeze funds might have stemmed from the US courts.
The investigator also points out that the frozen wallets are allegedly linked to groups involved in a civil lawsuit in New York. However, the case is sealed, and there are no clear-cut reasons or evidence for the action that has been disclosed to the public.
To put it all together, Circle does not randomly freeze wallets; this is what both ZachXBT, Specter, and other investigators cite.
Circle’s and Tether’s freeze comes amid increasing regulatory inspection of digital assets linked to illicit activities. Earlier this month, the US Treasury Department urged Congress to consider new legislation mandating crypto platforms to freeze funds connected to criminal activities.
