Circle unfroze the USDC (USDC) balance in one of 16 wallets it had blocked earlier this week, prompting on-chain investigator ZachXBT to call the original freeze possibly "the single most incompetent" he has witnessed in more than five years of tracking illicit crypto activity.
Circle's Wallet Reversal
ZachXBT identified the restored address as "0x61f…e543," which is linked to Goated.com. The wallet held roughly 130,966 USDC at the time of the update, according to data from Arkham.
He noted that other affected wallets could also be restored soon.
Circle had frozen USDC balances across 16 hot wallets reportedly tied to unrelated businesses.
At least one impacted entity said the action was connected to a sealed U.S. civil case, though no public justification was provided.
ZachXBT conducted an independent review of on-chain activity and found the wallets appeared operational, with no signs of illicit behavior.
"In my 5+ years of investigations, it could potentially be the single most incompetent freeze I have seen," ZachXBT wrote. "This is what happens when you outsource your freezing decisions to literally any random federal judge instead of having a process."
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Accountability Questions
Several market commentators argued that freezing wallets without clear evidence risks disrupting legitimate business activity. One noted that unfreezing a single wallet does little to address the broader concerns.
MetaMask security researcher Taylor Monahan criticized Circle's approach directly. She stressed that freezing user funds demands thorough investigative work and accountability.
Monahan pointed out that the process has long relied on court authorization rather than independent technical verification — meaning if a U.S. federal court approves a freeze request, Circle typically enforces it, even when the details remain unclear or contested.
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