Circle, the well-known stablecoin issuer behind $USDC, has blacklisted the confidential $USDC ($cUSDC) contract address of the cryptography firm Zama. Particularly, Circle has frozen a cumulative $12.6M in consumer funds. ZachXBT, an on-chain investigator, recently flagged the freeze, disclosing that the impacted address had taken part in the Overnight Finance governance vote. Hence, Overnight Finance has experienced accusations of executing a rug pull, making the scenario surrounding the frozen funds more complicated.
🚨 Circle has blacklisted the contract address of Zama’s confidential USDC (cUSDC) on Ethereum, freezing ~$đťźđťź®.𝟲𝗠in user funds.
The freeze was flagged by on-chain investigator ZachXBT. The address had recently participated in an Overnight Finance governance vote — an entity…
— Spot On Chain (@spotonchain) May 30, 2026
Zama $cUSDC Contract Blacklisted by Circle with $12.6M Freeze
The on-chain data reveals that Circle has blacklisted the Zama $cUSDC contract address and frozen $12.6M. Before that, the address had engaged in votes for treasury allocation within the Overnight Finance. The respective project is currently undergoing scrutiny over the accusations of performing a rug pull. In this respect, Patagon Management served as a plaintiff in a lawsuit confronting the protocol.
Based on its engagement, Patagon, which is famous for its robust DAO strategies, has raised questions regarding the link between Zama’s contract and the frozen address. In line with the on-chain statistics, the team of Zama seems to have received no notice before the execution of the freeze, triggering debate regarding the due procedure related to blockchain governance.
On this, Rand, the founder of Zama, clarified the freeze’s root cause. He mentioned that the development did not relate to the privacy technology of the platform. Rather, it stemmed from up to $USDC of up to $12.5M worth that an address associated with the Overnight Finance exploit deposited. At that time, the address had not been sanctioned and was not even flagged in the category of high-risk by Know Your Transaction (KYT) instruments.
Centralized Control Ignites Concerns Amid Smart Contract Vulnerabilities
So, Rand added, this permitted the capital flow into the Zama protocol. Additionally, as over 99% of the holdings of the $cUSDC contract stemmed from the respective address, it faced a freeze order from the court for the prevention of further movement. Overall, the market onlookers are anticipated to increase scrutiny of privacy-first stablecoin wrappers as well as a likely shift toward exclusive decentralized alternatives, while traders reduce their exposure to such centralized issuers.