Circle Blacklists Zama's cUSDC Contract, Freezing $12.6M
On May 30, Circle blacklisted Zama's confidential USDC (cUSDC) contract on Ethereum, freezing approximately $12.6 million. The freeze prevents cUSDC holders from redeeming tokens for standard USDC. Zama's privacy protocol uses fully homomorphic encryption (FHE) to hide balances and transactions. Circle has not publicly explained the decision, but on-chain investigator ZachXBT linked the freeze to Overnight Finance, which recently held a governance vote amid allegations of a potential rug pull. The incident raises concerns about centralized control over stablecoins in DeFi, as innocent cUSDC users may be affected. This action underscores the tension between privacy protocols and fiat-backed stablecoins, with critics highlighting risks of unilateral freezing power. Zama CEO Rand Hindi stated they are investigating the situation.
Key facts
- Circle blacklisted Zama's cUSDC contract on May 30, freezing $12.6M.
- The freeze prevents cUSDC holders from redeeming for standard USDC.
- ZachXBT linked the funds to Overnight Finance amid governance disputes.
- Innocent cUSDC users may be affected due to commingled funds.
- Incident highlights centralized control risks in stablecoin ecosystems.