Key Takeaways

• Circle has frozen $57.5 million in USDC tied to promoters of the controversial LIBRA project.

• The freeze may have been prompted by Argentinian criminal investigations, U.S. federal lawsuits, or both.

• Crypto entrepreneurs lack the legal protections afforded to government figures, increasing their vulnerability.

• This event serves as a stark reminder of the power held by stablecoin issuers in centralized crypto infrastructure.

LIBRA Scandal Intensifies

The sudden freeze has sent shockwaves through both crypto and political communities, especially as it remains unclear whether Argentinian criminal investigations or American civil litigation prompted the move.

Why Is LIBRA Under Fire?

The LIBRA project first captured global attention in February amid allegations of deep financial misconduct, potentially implicating high-level officials in Argentina, including, reportedly, President Javier Milei himself.

While the full extent of the president’s involvement is still being investigated, multiple promoters are already facing legal actions on various fronts.

The case has since evolved into a multinational legal affair, with parallel efforts underway in both Argentina and the United States. This dual-track scrutiny has complicated the narrative and heightened uncertainty for everyone involved.

Circle’s Sudden Freeze Of USDC Assets

Circle has decided to freeze $57.5 million in USDC from wallets tied to LIBRA affiliates, though the platform has not yet provided any concrete explanation behind this decision.

Circle Freezing Different Wallets Supposedly Tied To LIBRA

Source: Etherscan

This lack of clarity has fueled speculation about what, or who, motivated the freeze.

Competing Legal Narratives

There are currently two dominant theories surrounding Circle’s asset freeze:

1. Argentinian Criminal Prosecution

The Argentine government has launched a sweeping investigation into LIBRA’s financial activities.

Journalists and insiders suggest that growing political and legal pressure within Argentina may have forced Circle to act preemptively, particularly if local authorities requested assistance or flagged the assets as potentially illicit.

2. American Civil Litigation

Simultaneously, Burwick Law, a U.S.-based firm, has filed a civil suit in New York targeting non-Argentine LIBRA stakeholders. That lawsuit recently escalated to federal court, gaining momentum and potentially influencing Circle’s legal risk calculus.

Burwick Law Providing An Update On The Class-Action Lawsuit

Source: X (@BurwickLaw)

Being a New York-based company, Circle may have responded to evolving U.S. litigation more readily than foreign prosecution, even if both legal actions are running in parallel.

No Official Attribution Yet

As of this writing, no agency, legal team, or government body has formally claimed responsibility for initiating the freeze. Likewise, Circle has not issued a public comment. This silence adds another layer of complexity to an already murky situation.

Furthermore, it remains entirely possible that both legal processes, Argentina’s criminal charges and the U.S. civil suit, played a cumulative role. Conversely, Circle may have acted out of internal risk management concerns, anticipating further legal entanglements.

A Warning Shot To Crypto Entrepreneurs

Regardless of the driving force behind the freeze, the message is clear: crypto entrepreneurs are under increasing legal scrutiny, particularly when projects intersect with politics or large sums of capital.

Unlike government officials, who may benefit from diplomatic or legal protections, private actors in the crypto space often face the full brunt of the law without institutional shields.

FAQ

Why did Circle freeze the USDC?

While no official cause has been confirmed, it’s likely due to legal pressure from either Argentinian or American authorities, or both.

Has Circle frozen crypto assets before?

Yes. Circle has previously frozen USDC holdings when required by law enforcement or legal authorities. It is not uncommon for stablecoin issuers to intervene in such situations.

Is President Milei involved?

There is no confirmed involvement yet, but Argentine media have suggested that investigations are scrutinizing his possible ties to the LIBRA project.