Zama Users Frozen Out After $12.6M cUSDC Block by Circle

• $12.6 million in cUSDC frozen after Circle blocks Zama’s contract in response to exploit.
• ZAMA token price drops 18% while trading volume soars 61% amid investor uncertainty.

On May 31, 2026, The Block reported that Circle blacklisted Zama’s cUSDC smart contract address, following the Overnight Finance rugpull that compromised protocol funds. This action froze $12.6 million in cUSDC, immediately making all user funds inaccessible and affecting every user, not only those involved in the exploit.

ZAMA’s token price dropped 18% intraday after the block, while trading volume surged 61% to $73.9 million, nearly matching the protocol’s $77.5 million market cap. According to The Block, the price response was driven by widespread panic selling and speculative trading as users rushed to manage their exposure amid ongoing uncertainty.

The Zama team reacted by pausing additional contracts and launching legal attempts to limit the freeze to only the compromised wallet. Co-founder Rand Hindi issued a public statement warning that if these efforts fail, regular cUSDC users could remain locked out of their funds indefinitely, despite having no involvement in the exploit.

This event highlights the risks protocols face when external blacklisting impacts ecosystem assets, creating unintended consequences for unaffected users. The sharp fall in ZAMA’s price and the dramatic spike in trading volume reflected shaken investor confidence in protocol-level and stablecoin-based tokens.

As of May 31, 2026, 04:09 UTC, USDC (USDC) was trading at $1 with a 0.007% 24-hour change, according to CoinMarketCap.