TechFlow reports that on May 30, Rand, founder of the Zama protocol, disclosed in a post that the team has identified the cause of the recent cUSDC freeze incident, confirming it is unrelated to the Zama protocol itself or its privacy technology.
According to the explanation, a wallet address linked to the Overnight Finance hack deposited over $12.5 million in USDC into Zama’s cUSDC wrapper contract. At the time of deposit, this address was neither on any sanctions list nor flagged as high-risk by KYT (Know Your Transaction) tools; thus, the funds were allowed to enter the protocol.
Rand stated that, to assist with the investigation, Zama has suspended operations of its cUSDC, cUSDT, and cWETH wrapper asset contracts until the investigation concludes, all involved addresses are identified, and appropriate remedial measures are implemented.
He further explained that law enforcement agencies have recently issued asset restraint orders against multiple wallets associated with this hack. Since over 99% of the funds in the cUSDC contract at the time originated from these addresses, the court ordered the freezing of the entire wrapper contract to prevent further movement of illicit funds.
Rand emphasized that this freeze is not a regulatory action targeting Zama or privacy protocols, but rather a relatively common judicial asset freeze procedure within the DeFi space. The team is cooperating with relevant authorities to advance the investigation and plans to resume normal service once risk isolation is complete.
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