USDC Freeze: Circle Blacklists Zama cUSDC, Locks $12.6M Pending Court Hearing
A federal court order in the Overnight Finance dispute has forced Circle to blacklist Zama’s confidential USDC wrapper (cUSDC), freezing about $12.6M in pooled user funds on Ethereum. Because cUSDC aggregates deposits across multiple users, the USDC blacklist blocks the entire contract, not only the allegedly disputed amount.
The case targets Overnight Finance creator Maxim Ermilov. Plaintiffs allege he moved $15.77M from the Overnight Finance treasury into Zama’s cUSDC ahead of an OVN token holder vote to liquidate and distribute funds. Roughly $12.5M of the disputed value is USDC, with most landing inside cUSDC.
On May 29, a U.S. judge issued a TRO directing Circle to block the wallet activity and schedule a hearing. Circle executed the freeze the same evening. Zama paused cUSDC, cUSDT, and cWETH while it tries to isolate the flagged deposit so unaffected users can regain access. A hearing is scheduled for 1 June.
For traders, this is a real-world USDC settlement risk: even without an on-chain sanctions flag, a centralized issuer’s court-driven USDC blacklist can temporarily lock funds and quickly shift sentiment around privacy/confidential stablecoin wrappers and pooled collateral design.
Neutral
The event is contract-level access disruption driven by a court TRO, not a change to USDC’s core peg mechanism. While the immediate impact can raise settlement/operational anxiety for users of pooled “confidential” wrappers, it is unlikely to translate into a direct, sustained USDC price move by itself. Short-term, liquidity and redemption confidence may wobble around cUSDC/cUSDT/cWETH usage, but USDC market pricing should remain largely anchored unless the blacklist expands materially or the outcome damages broader issuer credibility.