{"id":73305,"date":"2026-05-30T15:13:01","date_gmt":"2026-05-30T15:13:01","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/zama-users-lose-access-to-12-6m-usdc-after-circle-executes-court-ordered-blacklist-bitcoin-news\/"},"modified":"2026-05-30T15:13:01","modified_gmt":"2026-05-30T15:13:01","slug":"zama-users-lose-access-to-12-6m-usdc-after-circle-executes-court-ordered-blacklist-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/zama-users-lose-access-to-12-6m-usdc-after-circle-executes-court-ordered-blacklist-bitcoin-news\/","title":{"rendered":"Zama Users Lose Access to $12.6M USDC After Circle Executes Court-Ordered Blacklist \u2013 Bitcoin News"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"@container mb-[25px] rounded-sm overflow-clip py-0.5 pr-0.5 pl-2.5 bg-success-100\">\n<div class=\"flex flex-col gap-m overflow-clip rounded-[6px] !bg-success-10 p-3 @[420px]:p-m\">\n<h2 class=\"m-0 flex items-center gap-s text-[19px] !text-[#1c1c1c] md:text-[20px]\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"10\" viewbox=\"0 0 16 10\" fill=\"none\" class=\"shrink-0 text-success-100\" aria-hidden=\"true\"><path d=\"M1 1.5h14\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><path d=\"M1 8.5h10\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><\/svg><span>Key Takeaways<\/span><\/h2>\n<ul class=\"m-0 flex list-none flex-col gap-m pl-0\">\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Circle blacklisted Zama\u2019s cUSDC Ethereum contract on May 30, 2026, freezing $12.6M in pooled USDC funds.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">A U.S. federal court TRO tied to Newton AC\/DC Fund LP\u2019s lawsuit against Maxim Ermilov triggered the freeze.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Zama plans to isolate the flagged deposit before a June 1 hearing to restore access for unaffected users.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2>Circle\u2019s Zama Blacklist Freezes $12.6M, Raising Questions About USDC Use in <span>DeFi<\/span> Contracts<\/h2>\n<p>The <a href=\"https:\/\/etherscan.io\/address\/0xe978F22157048E5DB8E5d07971376e86671672B2\" target=\"_blank\" rel=\"noopener noreferrer\">frozen address<\/a>, 0xe978F22157048E5DB8E5d07971376e86671672B2, is labeled \u201cZama: cUSDC Token\u201d on Etherscan and in Zama\u2019s own documentation. It functions as a pooled confidential USDC wrapper using fully homomorphic encryption to obscure token balances. Circle executed the blacklist around 1:08 UTC, halting redemptions for all users holding cUSDC in the contract.<\/p>\n<p>The freeze reportedly stems from a class-action lawsuit filed May 28, 2026, in the U.S. District Court for the Northern District of California. The <a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.cand.470978\/gov.uscourts.cand.470978.2.0.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">case<\/a>, Newton AC\/DC Fund LP et al. v. Maxim Ermilov et al., alleges Ermilov misappropriated more than $15 million from Overnight Finance\u2019s treasury. Judge P. Casey Pitts issued a temporary restraining order on May 29, directing Circle to blacklist assets linked to the alleged transfer. A full hearing is scheduled for June 1, 2026.<\/p>\n<figure id=\"attachment_818536\" aria-describedby=\"caption-attachment-818536\" style=\"width:1332px\" class=\"wp-caption aligncenter\"><figcaption id=\"caption-attachment-818536\" class=\"wp-caption-text\">Rand Hindi, Zama\u2019s co-founder and CEO. Image source: X<\/figcaption><\/figure>\n<p>Onchain investigator <a href=\"https:\/\/news.bitcoin.com\/zachxbt-accuses-kucoin-of-shielding-13m-in-stolen-crypto-from-german-investigators\/\">ZachXBT<\/a> reported on the freeze via his Telegram channel and traced the core deposit. He found that wallet 0xf7Fcc767dE537953b3519D4b3097A24A6dFE1c84, tied to Overnight Finance treasury operations, deposited roughly 12.4 million USDC into Zama\u2019s cUSDC contract on May 11, 2026. That single inflow represents more than 99% of the frozen balance.<\/p>\n<p>\u201cLooks like Circle blacklisted the Zama (privacy protocol) Confidential USDC (cUSDC) contract on Ethereum 7 hours ago, which has frozen 12.6M USDC of user funds,\u201d ZachXBT wrote. He called the action precedent-setting, adding: \u201cOverall, I feel bad for Zama users who have now been indirectly impacted with this mess of a U.S. civil case.\u201d<\/p>\n<p>Overnight Finance is a <span>DeFi<\/span> yield platform that issued the USD+ <span>stablecoin<\/span> and OVN governance token, raising roughly $850,000 in seed funding in 2022. After OVN holders voted via Snapshot to <span>liquidate<\/span> and distribute the treasury following rug-pull allegations, approximately $15.77 million, including the $12.5 million in <a href=\"https:\/\/news.bitcoin.com\/circle-and-nium-partner-to-fuel-usdc-cross-border-crypto-payments\/\">USDC<\/a>, was moved from treasury-linked wallets before the vote finalized.<\/p>\n<p>Ermilov, a Russian citizen based in the Middle East, disputes those characterizations and says the wallets held personal and team funds, the OVN token carries no security status, and the move to Zama was for privacy and personal security reasons.<\/p>\n<p>Among the plaintiffs is Patagon Management, a Delaware entity associated with Diogenes Casares and a pattern of hostile <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-a-dao\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DAO<\/a> takeovers involving protocols including Fei, Rome, Temple, and Spartacus. ZachXBT flagged Patagon\u2019s involvement and noted the group\u2019s history of asset freezes and <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-a-dao\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DAO<\/a> unwindings.<\/p>\n<p>Zama says it received no advance notice from Circle or the court before the blacklist was executed. The contract had been publicly deployed for roughly 154 days, and the depositing address showed no sanctions flags or KYT alerts at the time of deposit. Rand Hindi, Zama\u2019s co-founder and CEO, stated plainly: \u201cThis has nothing to do with Zama, or privacy.\u201d<\/p>\n<p>Hindi <a href=\"https:\/\/x.com\/randhindi\/status\/2060671833674797162?s=20\" target=\"_blank\" rel=\"noopener noreferrer\">thanked<\/a> ZachXBT for helping identify the root cause and confirmed that all deposit activity was visible on public block explorers. Zama has since paused its cUSDC, cUSDT, and cWETH wrappers while its legal team engages U.S. counsel. The team says it will isolate the flagged deposit to restore access for users not connected to the Overnight dispute.<\/p>\n<p>The situation revives ongoing criticism of Circle\u2019s blacklisting practices. ZachXBT previously <a href=\"https:\/\/news.bitcoin.com\/usdc-freeze-controversy-zachxbt-says-circle-froze-16-legitimate-wallets-missed-real-hacks\/\">reported,<\/a> the month prior, that Circle froze more than 16 hot wallets belonging to businesses and protocols without explanation. Critics have also noted inconsistencies in response times, pointing to slower action during exchange hacks compared to faster execution on civil court orders.<\/p>\n<p><a href=\"https:\/\/www.zama.org\" target=\"_blank\" rel=\"noopener noreferrer\">Zama<\/a> describes its protocol as infrastructure. The system obscures token balances using FHE but does not hide sender or recipient addresses, and the company has been explicit that it does not function as a mixer or tumbler. The court-ordered freeze hit a pooled contract rather than the specific depositor\u2019s address, meaning unrelated users lost access to their funds.<\/p>\n<p>The June 1 hearing may produce an isolation order or partial release. Until then, roughly $12.6 million in USDC remains locked, and the case raises direct questions about the scope of centralized <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-are-stablecoins\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">stablecoin<\/a> blacklisting in public, commingled <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-defi-decentralized-finance\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">DeFi<\/a> contracts.<\/p>\n<\/p><\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/zama-users-lose-access-to-12-6m-usdc-after-circle-executes-court-ordered-blacklist\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways Circle blacklisted Zama\u2019s cUSDC Ethereum contract on May 30, 2026, freezing $12.6M in pooled USDC funds. A U.S. federal court TRO tied to Newton AC\/DC Fund LP\u2019s lawsuit against Maxim Ermilov triggered the freeze. Zama plans to isolate the flagged deposit before a June 1 hearing [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":73306,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/73305"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=73305"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/73305\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/73306"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=73305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=73305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=73305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}