Seizure of Frozen Crypto Wallets on Circle
Circle is a global financial technology company that issues USD Coin (USDC). USDC is a regulated stablecoin. Circle helps businesses manage digital currencies for payments, commerce, and other financial applications by serving as a financial platform built on cryptocurrency and public blockchains.
As a centralized issuer of USDC, Circle has the authority to “blacklist” addresses and freeze funds at the request of state or federal law enforcement officers in the United States. The freezing operation is recorded on the blockchain, making it a transparent. One biggest drawback of owning USDC occurs because of how aggressive they are in freezing the owner’s access.
For example, the Internal Revenue Service Criminal Investigation (IRS-CI) might freeze a cryptocurrency wallet on Circle containing USD Coin (USDC). Many of those IRS-CI criminal investigations are focused on investigating financial crimes like tax fraud and money laundering.
The account holder needs an attorney focused on federal civil asset forfeiture proceedings focused on the nature of cryptocurrency regulations. The attorneys at Sammis Law Firm are focused administrative and judicial civil asset forfeiture actions, especially those involving high value cryptocurrency accounts on platforms like Circle.
Federal law enforcement agencies can request that a platform like Circle freeze a wallet containing USD Coin (USDC) as part of a criminal investigation. While the account is frozen, the law enforcement agency might serve a subpoena on Circle to obtain information on the account and the account holder. Based on that information, the law enforcement officer might seek a seizure warrant from a judge. When the seizure warrant is served on Circle, they will send the contents of the wallet to a U.S. government controlled wallet.
If the cryptocurrency seized is valued at less than $500,000, the federal agency can begin an administrative forfeiture by publishing a notice of seizure on the forfeiture.gov website. The owner of the wallet must then find that notice of seizure and respond appropriately by filing a verified claim for court action before the deadline announced in the notice.
If the cryptocurrency seized is valued at $500,000 or more, the federal agency must initial court action by convincing an Assistant United States Attorney to file a complaint for forfeiture in the appropriate U.S. District Court. In those cases, the account holder must find the notice of seizure published by the United States Attorney’s Office (USAO) on the forfeiture.gov website.
Attorney for Seizures of Frozen USDC on Circle
If the funds in your Circle wallet were frozen because of actions taken by a law enforcement agency in the United States, contact an experienced civil asset forfeiture attorney. Your attorney can investigate transactions in your wallet to learn more about what triggered the investigation.
While the wallet is frozen, Circle might give you contact information for the lead agent on the case with a request that you reach out to them. At that point, it might be best to retain an attorney in the United States who is experienced with criminal and civil asset forfeiture proceeding.
The experienced asset forfeiture attorneys at Sammis Law Firm are experienced in dealing with IRS investigations into cryptocurrency. We work with some of the top experts in tax law and regulations. We can help you determine the legal basis for the Circle account being frozen, and help you respond appropriately before the funds are seized.
By being proactive, your civil asset forfeiture attorney can help you gather the relevant financial records which might include transaction history, tax filings, and information about the source of the funds to show the assets were obtained and used legally.
Use our evaluation form on the right side of the website to request a consultation with an attorney at Sammis Law Firm, or call us at 813-250-0500.
Recent Court Actions Involving Frozen Assets on Circle
In May of 2025, Circle froze approximately $57,000,000.00 million in USDC after obtaining a court order related to a lawsuit involving the LIBRA memecoin scam. The action triggered a significant drop in the token’s value and investor losses. Many investors who unwittingly purchased USDC for fair market value were caught up in this action unfairly.
In early October 2025, Circle was unable to freeze USDC funds stolen in a hack on the Coinbase exchange, as a results of hackers moving the funds across different blockchains.
Circle might also block transfers from addresses associated with illegal activity or violations of its user agreement. For example, in 2022, Circle froze more than 75,000 USDC held by users with ties to the cryptocurrency mixer Tornado Cash in response to sanctions issued by the U.S. Treasury Department for facilitating money laundering.
Circle recently announced that it froze $57,000,000 in USDC connected to the Libra memecoin scam.
How Circle Freezes Accounts Pending Seizure
How does Circle freeze or block associated USDC from a specific wallet address? For Circle-custodied funds, the freeze is a function in the USDC smart contract. The Circle’s compliance team has the authority to “blocklist” or freeze addresses based on special functions explained in the USDC smart contract.
Circle holds the private key used to interact with the smart contract and execute these freeze functions.
Circle reserves the right to block addresses and freeze associated USDC if it determines the addresses are linked to illegal activities or violation of their terms of service.
The USDC terms of use provide:
Blocked Addresses & Forfeited Funds
Circle reserves the right to “block” certain USDC addresses and, if such addresses are Circle custodied addresses, freeze associated USDC (temporarily or permanently) that it determines, in its sole discretion, may be associated with illegal activity or activity that otherwise violates these Terms (“Blocked Addresses”). In the event that you send USDC to a Blocked Address, or receive USDC from a Blocked Address, Circle may freeze such USDC and take steps to terminate your USDC Account. In certain circumstances, Circle may deem it necessary to report such suspected illegal activity to applicable law enforcement agencies and you may forfeit any rights associated with your USDC, including the ability to redeem USDC for USD. Circle may also be required to freeze USDC and/or surrender associated USD held in Segregated Accounts in the event it receives a legal order from a valid government authority requiring it to do so.
Read more about IRS-CI seizures for forfeiture.
This article was last updated on Friday, October 3, 2025.
