Zama Users Locked Out of $12.6M as Circle Freezes Contract

• Circle’s freeze of Zama’s cUSDC contract locked $12.6 million in user funds and drove ZAMA’s token price down by over 18%.
• The event exposed risks for DeFi protocols relying on centralized stablecoins and led to a spike in trading volume.

On May 30, 2026 (UTC), CoinDesk reported that Circle froze Zama’s confidential USDC smart contract after funds linked to the Overnight Finance hack were deposited, rendering approximately $12.6 million in user funds inaccessible. Zama co-founder Rand Hindi stated that the protocol was not involved in the hack and that all transactions were traceable; however, Circle’s compliance measures froze the entire contract address, affecting both illicit and regular user funds.

ZAMA’s token price dropped over 18% during intraday trading, hitting a low of $0.032 from $0.039 before a partial recovery. Trading volume increased by more than 61% to nearly $74 million, close to the protocol’s market capitalization. Zama paused its cUSDC, cUSDT, and cWETH contracts to minimize additional losses and began seeking legal channels to reduce the freeze’s impact.

The incident resulted in widespread user lockouts, underscoring the risks DeFi protocols face when they depend on centralized stablecoins for privacy-wrapped and on-chain assets. During the price drop, selling intensified and confidence in Zama and similar protocols weakened. Zama is seeking legal remedies to restore access to frozen funds; however, the possibility of prolonged fund inaccessibility remains.

As of May 30, 2026, 21:08 UTC, USDC was trading at $1, with a 0.002% change in 24-hour trading volume, according to the Market Survey.