Circle Freezes 16 USDC Wallets: ZachXBT Questions the Move, Stock Drops 25%

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ZachXBT Questions Circle Over Freezing 16 Active USDC Wallets

Key Highlights

  • Circle froze 16 active USDC wallets belonging to normal businesses, including exchanges, casinos, and forex platforms, due to an ongoing U.S. civil case.
  • ZachXBT criticized the freeze, saying the wallets were clearly operational business accounts and that the request was not properly reviewed.

ZachXBT, a blockchain researcher, recently asked Circle, the company behind the USDC stablecoin, why they unexpectedly froze the accounts of 16 legitimate businesses. The freeze happened yesterday and is related to a current legal case in the United States.

The wallets seem to have been used for regular transactions like trading on exchanges, gambling at casinos, and foreign currency trading. Researcher ZachXBT investigated these wallets and found no evidence linking them together.

Yesterday, Circle unexpectedly froze the USDC balances of 16 active digital wallets as part of a legal dispute. It seems unusual that they took this action considering these wallets appear to be regularly used. Many are criticizing this response, pointing out that Circle doesn’t seem to prioritize protecting users when real security issues occur, yet acted quickly on a flawed request.

— ZachXBT (@zachxbt) March 24, 2026

ZachXBT questioned the company’s decision to block the wallets without proper investigation, and expressed worry about whether Circle thoroughly evaluated the request given the time constraints.

ZachXBT criticized Circle for freezing the wallets 

ZachXBT reported on his Telegram channel that he spoke with a business impacted by the freeze, and they confirmed it was due to the ongoing legal case.

I spoke directly with one of the businesses impacted, and they explained the issue stemmed from an ongoing legal case in the US, the specifics of which haven’t been made public yet. I also looked into the blockchain data and activity on exchanges, and it doesn’t seem like the exchanges, casinos, or forex businesses are connected to this at all.

ZachXBT pointed out flaws in the request to freeze the wallets, saying it “was full of mistakes” and that Circle didn’t check it carefully enough.

ZachXBT questioned on X why Circle suddenly froze the USDC balances of 16 active wallets yesterday as part of a legal dispute. He noted that a quick look at the blockchain data shows these wallets are actively being used.

He explained that even a simple analysis of the transactions would have quickly revealed these were wallets used for regular business activity. He also stated that these actions have disrupted the normal business operations of those affected.

He added that companies commonly use ‘hot wallets’ to handle most of their customers’ transactions. However, he stated that their operations are now suffering due to issues involving Circle, their legal counsel, a forensics firm, and a judge.

Community reaction

Circle hasn’t publicly addressed questions raised by ZachXBT, but the company is facing criticism because of the situation.

— Nick Bax.eth (@bax1337) March 24, 2026

As an analyst, I’ve been following the discussion around ZachXBT’s recent comments, and a key point raised by one user is a perceived double standard in how this firm handles frozen wallets. They claim the firm doesn’t take action against wallets linked to known hackers, specifically those originating from North Korea, but *did* freeze sixteen business hot wallets seemingly at random. This discrepancy is definitely something I’m watching closely.

One user suggested the pause was probably caused by pressure from U.S. officials. They explained the information currently available wasn’t enough and noted that Circle hadn’t taken action in similar situations before unless pushed by authorities.

Circle stock drops 25% in a day

As a researcher following this closely, I’ve observed that the company’s stock price fell roughly 25% this morning. This drop seems to be connected to concerns arising from a preliminary draft of the proposed U.S. stablecoin law, specifically regarding potential restrictions on yield.

Currently, the stock price is $100, after peaking at $126 earlier today. ZachXBT explained in response to comments that the price drop wasn’t due to his recent post, but instead happened because of news surrounding the new proposed law.

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2026-03-24 22:13