On May 29th, a U.S. district court judge ordered Circle to freeze USDC related to the dispute with Overnight Finance. As a result, Circle blacklisted the entire cUSDC contract linked to $ZAMA , locking up around $12.6 million, even more than the amount in dispute.
It seems that someone (suspected to be linked to the Overnight founder's wallet) dumped funds into Zama's cUSDC. This contract employs fully homomorphic encryption, which can hide balances and transaction records, but is still traceable on-chain. Circle didn’t just freeze a few problematic addresses but locked the whole pool, causing many ordinary users and LPs to have their funds stuck.
Zama reacted relatively quickly, with founder Rand Hindi stating that this was purely an issue caused by an external address, not a problem with their protocol. They promptly suspended cUSDC, cUSDT, and cWETH contracts to assist in the investigation and are currently figuring out how to separate the innocent funds, with a hearing set for June 1st to discuss next steps.
This incident raises the question: which is safer, USDC or USDT?
To be honest, neither is truly safe; both are centralized assets, and the issuers can freeze them at will. But if we’re comparing:
Freeze Risk: Both have blacklists and must comply with court orders and law enforcement. USDT has a harsher freezing history, having frozen hundreds of millions multiple times. This time, USDC’s complete contract lock was pretty intense, but overall, it hasn’t been frozen as often as USDT.
Transparency of Reserves: USDC is much stronger here, with 100% cash + short-term U.S. Treasuries, audited independently every month. USDT's reserves are mixed (loans, Bitcoin, etc.), previously criticized, it's improved but still falls short.
Regulation: USDC is regulated in the U.S. and is favored by institutions and in Europe. USDT has the strongest liquidity (especially on Tron), but faces significant compliance pressure and can feel awkward to use in some regions.
If you want stability and plan to hold long-term without fuss, USDC feels more reassuring. For primary trading, liquidity chasing, and if you’re not worried about occasional fund freezes, USDT is more convenient.
However, this situation with Zama serves as a reminder that USDC and USDT are both essentially IOUs for dollars—one word from them can lock up your funds. If you want true peace of mind, it’s best not to dump everything into centralized stablecoins, diversify a bit, or explore some decentralized options for more reliability. What do you think?
It seems that someone (suspected to be linked to the Overnight founder's wallet) dumped funds into Zama's cUSDC. This contract employs fully homomorphic encryption, which can hide balances and transaction records, but is still traceable on-chain. Circle didn’t just freeze a few problematic addresses but locked the whole pool, causing many ordinary users and LPs to have their funds stuck.
Zama reacted relatively quickly, with founder Rand Hindi stating that this was purely an issue caused by an external address, not a problem with their protocol. They promptly suspended cUSDC, cUSDT, and cWETH contracts to assist in the investigation and are currently figuring out how to separate the innocent funds, with a hearing set for June 1st to discuss next steps.
This incident raises the question: which is safer, USDC or USDT?
To be honest, neither is truly safe; both are centralized assets, and the issuers can freeze them at will. But if we’re comparing:
Freeze Risk: Both have blacklists and must comply with court orders and law enforcement. USDT has a harsher freezing history, having frozen hundreds of millions multiple times. This time, USDC’s complete contract lock was pretty intense, but overall, it hasn’t been frozen as often as USDT.
Transparency of Reserves: USDC is much stronger here, with 100% cash + short-term U.S. Treasuries, audited independently every month. USDT's reserves are mixed (loans, Bitcoin, etc.), previously criticized, it's improved but still falls short.
Regulation: USDC is regulated in the U.S. and is favored by institutions and in Europe. USDT has the strongest liquidity (especially on Tron), but faces significant compliance pressure and can feel awkward to use in some regions.
If you want stability and plan to hold long-term without fuss, USDC feels more reassuring. For primary trading, liquidity chasing, and if you’re not worried about occasional fund freezes, USDT is more convenient.
However, this situation with Zama serves as a reminder that USDC and USDT are both essentially IOUs for dollars—one word from them can lock up your funds. If you want true peace of mind, it’s best not to dump everything into centralized stablecoins, diversify a bit, or explore some decentralized options for more reliability. What do you think?