Circle Freezes $58M USDC Linked to Solana’s LIBRA Scam, Sparking Centralization Debate and SOL Price Speculation
Circle, the issuer of USDC, has frozen $58 million in USDC tokens on Solana at the request of US regulators, following a class action lawsuit over the LIBRA meme coin scam. The LIBRA token, heavily promoted by Argentina’s President Javier Milei, experienced a dramatic pump-and-dump scheme, causing investor losses exceeding $250 million. Two Solana wallets tied to the LIBRA project were blocked, with funds frozen at least until a court hearing on June 9, 2025. This incident has renewed debate about centralization risks in decentralized finance as centralized entities like Circle retain control over assets even on decentralized blockchains. Despite short-term negative sentiment and price declines for Solana (SOL), technical analysis indicates the potential for bullish momentum, highlighted by an inverse head and shoulders breakout formation and increased meme coin activity on the network. Furthermore, the upcoming Solaxy (SOLX) layer-2 solution presale could ease congestion and promote ecosystem growth. Crypto traders should monitor ongoing regulatory developments, supply restrictions from frozen assets, and key SOL technical resistance levels for possible impacts on volatility and long-term trends.
Neutral
The freeze of $58 million USDC by Circle on the Solana blockchain due to the LIBRA scam introduces short-term negative sentiment toward SOL by highlighting risks related to centralization and regulatory intervention. The case underscores the vulnerability of decentralized finance assets to actions by centralized issuers, which could deter some investors and create volatility. However, technical indicators and speculative meme coin activity on Solana, as well as infrastructure developments like Solaxy (SOLX), offset bearish pressure by suggesting potential for price recovery and network growth. As a result, the overall impact remains neutral: negative regulatory news and supply shocks balance with possible bullish technical setups and ecosystem expansion.