Key Points
- Circle lifted restrictions on one of 16 frozen USDC wallets following mounting public criticism.
- The unfrozen wallet associated with Goated.com contained approximately $130,966 in USDC.
- Blockchain investigator ZachXBT initially exposed the freeze and challenged Circle’s decision to target operational wallets.
- The stablecoin issuer claims the action stemmed from a sealed civil proceeding in New York.
- Fifteen affected USDC wallets continue to remain restricted as of this report.
Circle has lifted restrictions on one previously blacklisted USDC wallet following heightened public criticism. The stablecoin issuer had frozen 16 operational wallets connected to functioning businesses several days prior. On-chain investigator ZachXBT documented the reversal and raised questions about the initial freezing decision.
Stablecoin Issuer Reverses Restriction on USDC Address
On March 23, Circle imposed freezes on 16 USDC hot wallets in accordance with a sealed civil court directive from New York. The measure prevented withdrawals and transactions for cryptocurrency exchanges, online casinos, foreign exchange platforms, and payment processing services. Multiple companies experienced liquidity challenges due to the locked operational capital.
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
Three days later, on March 26, Circle lifted the freeze on a wallet connected to Goated.com. The address regained control of approximately $130,966 in USDC once the restriction was removed. ZachXBT highlighted this development and suggested additional reversals might occur.
The investigator had previously questioned Circle’s rationale for freezing unconnected hot wallets used for standard operational activities. In a post dated March 24, he challenged why a civil lawsuit would warrant such extensive blacklisting. He subsequently characterized the enforcement action as “potentially the most incompetent” freeze he had witnessed over five years.
ZachXBT additionally mentioned the confidential New York case and identified a plaintiff’s attorney from the law firm Willkie Farr. He expressed criticism toward both the presiding judge and the expert witness for their limited understanding of blockchain technology. He called on Circle CEO Jeremy Allaire to provide transparency regarding the company’s internal decision-making procedures.
Circle has declined to provide specifics, pointing to the confidential nature of the legal proceedings. At publication time, the majority of the frozen wallets remain inaccessible. Companies associated with these addresses continue experiencing operational difficulties.
Stablecoin Freezes Remain Under Industry Scrutiny
Circle has implemented USDC freezes previously when responding to legal and regulatory mandates. In 2020, the company blacklisted a wallet and restricted approximately $100,000 in USDC. Two years later, it blocked addresses associated with Tornado Cash following sanctions imposed by the U.S. Treasury Department.
During May 2025, Circle froze roughly $57 million in USDC related to civil litigation involving the LIBRA memecoin fraud scheme. The company stated it was following legally binding orders in these instances. Circle incorporates blacklist capabilities directly into its USDC smart contract infrastructure.
Tether, which issues USDT, has documented more extensive enforcement measures. The organization reports freezing over $4.2 billion in USDT connected to criminal activities. According to its disclosures, $3.5 billion of this amount was frozen from 2023 onward.
Throughout 2023, Tether restricted $435 million across 326 separate wallets. In early 2026, it froze $61 million in USDT tied to romance scam operations. During 2025, it blocked $225 million associated with an investment fraud investigation.
Tether also froze $23 million linked to the sanctioned Russian exchange Garantex. The company has collaborated with the U.S. Department of Justice, Federal Bureau of Investigation, and Secret Service. It has destroyed tokens following seizures to facilitate asset recovery processes.
As of March 26, just one of the 16 blacklisted USDC wallets has had its access restored. ZachXBT indicated that additional developments may surface as the legal case advances. Circle has not released any public statement beyond referencing the sealed court directive.
