Circle Unfreezes One USDC Wallet After ZachXBT Criticism

TLDR

• Circle unfroze one of the 16 blacklisted USDC wallets after public backlash intensified.
• The restored wallet linked to Goated.com regained access to about $130,966 in USDC.
• ZachXBT first reported the freeze and questioned why Circle targeted unrelated operational wallets.
• Circle said it acted in response to a sealed civil case in New York.
• Most of the affected USDC wallets remain frozen at the time of reporting.

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Circle restored access to one previously frozen USDC wallet after public scrutiny intensified. The company had blacklisted 16 operational wallets linked to active businesses days earlier. Blockchain investigator ZachXBT reported the reversal and questioned the original freeze decision.

Circle Reverses Course on USDC Wallet Freeze

Circle froze 16 USDC hot wallets on March 23 following a sealed New York civil court order. The action halted withdrawals and payments for exchanges, casinos, forex platforms, and payment processors. As a result, several firms reported liquidity disruptions tied to blocked operational funds.

Circle unfroze the USDC for the Goated hot wallet a few minutes ago.

I expect more hot wallets to be unfrozen soon.

The crypto community needs answers from @jerallaire @circle about why this overreach ever occurred to begin with. pic.twitter.com/Hscp0RAoMY

— ZachXBT (@zachxbt) March 26, 2026

However, on March 26, Circle unfroze one wallet linked to Goated.com. The wallet regained access to about $130,966 in USDC after the restriction lifted. ZachXBT flagged the update and wrote that more reversals could follow.

He had earlier questioned why Circle targeted unrelated hot wallets handling routine transactions. In a March 24 post, he asked why a civil case prompted broad blacklisting. He later described the action as “potentially the most incompetent” freeze he had seen in five years.

ZachXBT also referenced the sealed New York case and named a plaintiffs’ lawyer from Willkie Farr. He criticized the judge and expert witness for lacking blockchain expertise. He urged Circle CEO Jeremy Allaire to clarify the company’s internal review process.

Circle has not disclosed details and cited the sealed proceedings. Meanwhile, most of the affected wallets remain frozen at press time. Businesses linked to those wallets continue to report operational constraints.

USDT and USDC Freezes Draw Continued Attention

Circle has frozen USDC before in response to legal and regulatory orders. In 2020, the company blacklisted an address and froze about $100,000 in USDC. In 2022, it blocked addresses linked to Tornado Cash after U.S. Treasury sanctions.

In May 2025, Circle froze about $57 million in USDC tied to a civil case involving the LIBRA memecoin scam. The company said it complied with binding legal directives in those cases. Circle maintains blacklist functions within its USDC smart contracts.

Tether, issuer of USDT, has reported larger enforcement actions. The company said it has frozen over $4.2 billion in USDT linked to illicit activity. It stated that $3.5 billion of that total occurred since 2023.

In 2023, Tether froze $435 million across 326 wallets. In early 2026, it froze $61 million in USDT tied to romance scams. In 2025, it blocked $225 million linked to an investment fraud case.

Tether also froze $23 million connected to the sanctioned Russian exchange Garantex. The company has worked with the U.S. Department of Justice, the FBI, and the Secret Service. It has burned tokens after seizures to support asset recovery efforts.

As of March 26, only one of the 16 blacklisted USDC wallets has been restored. ZachXBT stated that further updates could emerge as the case progresses. Circle has not issued a public statement beyond citing the sealed court order.

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