Circle Blacklists Zama cUSDC, Freezes $12.6M in USDC

Circle executed a blacklist on the Ethereum contract labeled “Zama: cUSDC Token” around 1:08 UTC on May 30, 2026, freezing roughly $12.6 million in pooled USDC and halting redemptions for users holding cUSDC in the contract at 0xe978F22157048E5DB8E5d07971376e86671672B2.

The action followed a temporary restraining order issued May 29 by U.S. District Court Judge P. Casey Pitts in Newton AC/DC Fund LP et al. v. Maxim Ermilov et al., a civil case filed May 28. The order directed Circle to blacklist assets linked to an alleged transfer connected to Overnight Finance’s treasury. A full hearing is scheduled for June 1, 2026.

On-chain analysis traced the bulk of the locked funds to a single wallet tied to Overnight Finance treasury operations, 0xf7Fcc767dE537953b3519D4b3097A24A6dFE1c84, which deposited about $12.4 million in USDC into the Zama contract on May 11. That deposit represents more than 99% of the frozen balance.

Overnight Finance, a decentralized finance yield platform that issued the USD+ stablecoin and the OVN governance token, moved about $15.77 million from treasury-linked wallets after OVN token holders voted to liquidate the treasury. Maxim Ermilov, identified in the lawsuit as Overnight Finance’s founder, has disputed the allegations, arguing that the wallets held personal and team funds, that OVN is not a security, and that the transfer to Zama was made for privacy and personal safety reasons.

Zama said it received no advance notice from Circle or the court before the blacklist. The company noted the cUSDC contract had been publicly deployed for about 154 days and that the depositing address showed no sanctions flags or KYT alerts at the time of deposit. Zama paused its cUSDC, cUSDT and cWETH wrappers while it retains U.S. counsel and works to isolate the flagged deposit so users not connected to the Overnight Finance dispute can regain access to their funds.

Rand Hindi, Zama’s co-founder and CEO, wrote that “This has nothing to do with Zama, or privacy.” Security researchers who tracked the event posted that Circle’s action affected the pooled contract rather than the individual depositor address, which prevented unrelated users with funds in the wrapper from withdrawing their USDC.

An on-chain investigator posted early reports identifying the core deposit and described the blacklist as precedent-setting. Prior security reporting noted that Circle has previously frozen multiple hot wallets belonging to businesses and protocols in separate incidents.

Until the June 1 hearing produces further court orders, roughly $12.6 million in USDC remains locked in the Zama cUSDC contract. Zama is pursuing legal and technical steps aimed at restoring access for users not implicated in the Overnight Finance litigation.