According to a May 30 report by South Korea’s Tokenpost, Circle added Zama’s privacy-focused USDC contract (cUSDC), deployed on Ethereum, to the USDC blacklist, freezing roughly $12.6M in USDC. The report cites observations from on-chain investigator ZachXBT and notes that the frozen funds may be linked to a wallet that deposited about $12.4M into the related protocol on May 11. To be clear: the specific figures above, the alleged connection (such as a link to Overnight Finance), and the technical description of the “entire contract being locked” currently appear only in this secondhand Korean-language account. usdtcard.net has not conducted independent on-chain verification, and readers should treat these numbers as an unverified report rather than a confirmed fact.
But one thing holds true without needing verification — Circle holds contract-level freeze power over USDC, a feature written into the USDC smart contract that is public and has existed for a long time. This is the part worth understanding carefully as a USDT card user.
Editorial Take: Your Card Balance Is a “Liability,” Not Cash
Let’s first untangle a distinction that’s often muddled: a USDT card’s workflow is “you top up with stablecoin → the card issuer holds it in custody → it’s converted to fiat at the point of sale.” Which layer the freeze risk occurs at determines how much it actually affects you.
- If you use a card funded with USDT (such as the MPCard Asia Elite variant running on the USDT rail, RedotPay, or the USDT balance on Bybit Card), this particular Circle action has no direct bearing on you — the frozen asset is the USDC contract, not Tether.
- But “switch issuers and you’re safe” is the wrong takeaway. Tether also holds freeze power and has historically exercised it fairly often. The root issue isn’t Circle — it’s that all centralized stablecoins are freezable liabilities.
Expectations for users across different time horizons:
- Within 7 days: Retail users conducting normal top-ups, spending, and withdrawals are unaffected. This is a targeted freeze on a specific contract, not an industrywide policy shift, and card settlement rails will not be interrupted as a result.
- Within 30 days: Watch for whether card issuers update their “prohibited address / high-risk source” terms. When investigators like ZachXBT flag a protocol as high-risk, some issuers tighten source screening in response.
- Within 90 days: If the cUSDC incident escalates into a broader standoff between “privacy contracts vs. issuer compliance,” it could push the industry to debate the limits of stablecoin reversibility — a relevant reminder for anyone who habitually parks large stablecoin balances on a card.
If you’re currently choosing a card, start with the MPCard review to understand why we named it our editorial pick, then compare it against the 2026 USDT Card Top 5.
Historical Comparison: How This Differs From the 2022 Tornado Cash and 2023 USDC Depeg Events
This isn’t the first time stablecoin freeze power has made headlines.
In August 2022, after the U.S. OFAC sanctioned Tornado Cash, Circle proactively froze USDC held at related addresses — a textbook chain of “regulatory order → issuer enforcement,” where the controversy centered on guilt-by-association at the protocol-address level. The cUSDC incident shares a similar concern: that a contract-level blacklist could spill over onto unrelated funds. The difference is that, so far, there’s no public evidence Circle was acting on a government sanction; the reporting instead points to the issuer’s own judgment call on a suspected high-risk fund flow.
Another comparison point is the March 2023 depeg, when USDC briefly dropped to $0.87 due to its exposure to Silicon Valley Bank — that was a reserve-asset risk, an entirely different category of problem from “freeze power.” A depeg threatens whether a stablecoin can be redeemed at all; a freeze threatens whether your specific funds can be moved. Both point to the same principle for card users: stablecoins shouldn’t be treated as a long-term deposit.
Compliance Perspective: Freeze Power Is a Legal Function, Not a Gray Area
Let’s be clear about the boundary here: an issuer freezing an address under its own terms of service is unambiguously legal in the vast majority of jurisdictions, because what you hold is a redemption claim against the issuer, and the terms typically state that the issuer reserves the right to freeze, burn, or refuse redemption. This isn’t a gray area — it’s a foundational design premise of centralized stablecoins.
The gray area lies with cross-border users: when your USDC-funded card is used in Asia-Pacific, and the funds get frozen by an issuer based in the U.S. under U.S. compliance rules, your local jurisdiction offers almost no recourse. The stablecoin regulatory frameworks that Hong Kong and Singapore have advanced in recent years attempt to bring “reserves” and “redemption rights” under local oversight — but mainstream stablecoins today are still primarily governed by the issuer’s home-country rules. Asia-Pacific users can refer to the Hong Kong Stablecoin Compliance Guide and the Singapore Compliance Guide for the current state of local frameworks.
Key Developments Worth Watching
- Whether Circle issues an official statement on cUSDC: As of this article’s publication, Circle’s blacklist policy language can be found on its official compliance support page. A dedicated statement from Circle on this specific incident would be key to judging whether this was “targeted” or “collateral.”
- Follow-up posts from ZachXBT: The original observation came from their social media account. It’s worth tracking their firsthand posts directly rather than relying on secondhand accounts.
- On-chain verification: Once the specific frozen contract address is made public, anyone can check the freeze status and amount directly on an Ethereum block explorer — the only way to independently verify the $12.6M figure without relying on the Korean-language report.
- Response from privacy-stablecoin protocols: How privacy-contract projects like Zama respond to issuer blacklisting could shape the next round of “compliance vs. censorship resistance” product design.
Editorial Recommendations
- Users holding the USDT version of MPCard, Bybit Card, or RedotPay: no action needed. This freeze targets the USDC contract and has no bearing on USDT balances.
- All USDT card users, regardless of which stablecoin you use: treat this as a reminder not to hoard balances. A USDT card is a payment tool, not a savings account — top up only what you plan to spend, and withdraw any leftover balance promptly after spending. That’s the most practical way to reduce custodial-layer risk.
- Users currently choosing an issuer: don’t treat “USDT vs. USDC” as a safety dividing line — both are freezable. What actually matters is comparing an issuer’s source-screening terms, withdrawal speed, and customer support responsiveness — these are what determine whether you can get your money back if something goes wrong. Compare these dimensions in the 2026 USDT Card Top 5.
- What not to do: don’t use funds from an unverified wallet to top up your card just to try to dodge a freeze. Issuer source screening is only going to get stricter, and the hassle you’d save is far outweighed by the cost of having your account frozen.
To reiterate: the specific claims in this article — the $12.6M figure, the alleged link to Overnight Finance, the description of the “entire contract” being frozen — all come from a single secondhand Korean-language report, and usdtcard.net has not conducted independent on-chain verification. The one thing we consider established and worth remembering is this: the freeze power held by centralized stablecoin issuers is a structural fact, and the balance on your card is always a liability someone else can freeze.