Circle unfreezes one of 16 blacklisted USDC wallets following backlash: ZachXBT

Onchain sleuth ZachXBT has flagged that Circle has unfrozen the USDC balance held in one of the 16 wallets it targeted in an earlier action.

In a Wednesday post on X, ZachXBT said "0x61f…e543," a wallet tied to Goated.com, has regained access to its USDC balance. The wallet currently holds 130,966 USDC, according to Arkham data.

The onchain investigator noted in a message on Telegram that additional affected wallets could be restored "in the near future."

The move follows a Tuesday report that Circle froze USDC balances across 16 hot wallets linked to a range of unrelated businesses. At the time, ZachXBT said he had spoken with at least one affected entity, which indicated the freeze was tied to an ongoing U.S. civil case that remains undisclosed.

More harm than good

"The NY civil case is sealed and they have provided absolutely ZERO basis to freeze all of these business addresses," ZachXBT wrote in a separate post on Wednesday.

"In my 5+ years of investigations, it could potentially be the single most incompetent freeze I have seen," he added. "This is what happens when you outsource your freezing decisions to literally any random federal judge instead of having a process."

The revelation that Circle froze 16 wallets drew sharp criticism from the crypto community, reflecting long-standing concerns about the centralized nature of stablecoin oversight.

"This is not the first bad freeze they've done. And it won't be the last... No accountability. No responsibility. No recourse," MetaMask Security Researcher Taylor Monahan wrote in a post on X.

The Block has reached out to Circle for comment. The company has not publicly commented on the specific wallets or confirmed the legal basis for the freeze.