Circle, the issuer of the USDC stablecoin, has frozen approximately $58 million associated with the LIBRA memecoin scandal, which drew attention earlier this year due to its ties to Argentine President Javier Milei.
The freeze follows a legal push from Burwick Law, which is leading an international class action lawsuit in the U.S. District Court for the Southern District of New York.
Legal Action and Token Collapse
The LIBRA token, launched on Solana, lost over 90% of its value, prompting legal complaints from hundreds of investors. Burwick Law has named several individuals and organizations in the lawsuit, including Hayden Davis, Kelsier Ventures, decentralized exchange Meteora, its co-founder Ben Chow, Kip Protocol, and members of the Davis family.
In a public update on X, Burwick Law stated that the U.S. court granted an emergency temporary restraining order (TRO) to freeze the funds held at Circle. Co-counsel Tim Treanor supported the motion, helping halt movement of the remaining funds while legal proceedings continue.
Disputed Origins of Freeze Order
There is some confusion over how the freeze was initiated. A man named Martin Romeo suggested that the request came from Argentina’s legal system. Burwick Law, however, denied this and confirmed that the U.S. court was responsible for the emergency order.
Circle has not released an official statement about the freeze, keeping many in the crypto community questioning the transparency and process behind such a major action.
The freeze reignited debate about how centralized stablecoin issuers like Circle handle user funds during legal cases. Prominent crypto investigator ZachXBT criticized Circle’s inconsistent responses to fund freezes, pointing out delays during a $1.5 billion Bybit hack in February.
He compared Circle unfavorably to Tether, which has historically acted quickly when asked by authorities, including a freeze of $47 million in USDT related to FTX in 2022.