Circle freezes $12.6M of USDC linked to privacy protocol Zama
Circle froze $12.6 million USDC linked to Zama privacy protocol, likely due to an unrelated civil court case. The freeze affected Overnight Finance deposits commingled with Zama users' funds. Zama reportedly received no prior notice. This highlights Circle's inconsistent enforcement: freezing legitimate protocols while failing to freeze $420 million in stolen crypto since 2022, including the April Drift Protocol hack.
Key takeaways
- 1Circle froze $12.6 million USDC linked to Zama privacy protocol without prior notice to the project.
- 2Circle failed to freeze approximately $420 million in stolen crypto across 15 incidents since 2022, including $232 million from April 2026 Drift Protocol hack.
- 3Overnight Finance deposited $12.4 million into Zama on May 11, 2026, before funds were frozen due to unrelated civil court case.
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Why it matters
This highlights inconsistent stablecoin issuer enforcement that freezes legitimate DeFi protocols while failing to act on major hacks, raising regulatory uncertainty for Indian retail investors exposed to Circle's USDC and cross-chain DeFi protocols. It demonstrates centralized control risks in decentralized finance infrastructure that affect asset custody and protocol safety.
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