Yes, Circle has the ability to freeze funds at any address. They have promised to use this functionality in a large variety of situations:
you will not be using the USDC Services for any illegal activity, including, but not limited to, illegal gambling, money laundering, fraud, blackmail, extortion, ransoming data, terrorism financing, other violent activities or any prohibited market practices, including, but not limited to, those listed under Sections 23 and 24
This can also mean that a future US administration could find things some DAI holders are doing is illegal, and they may consider sabotaging DAI to fight that activity, or to purify USDC in the eyes of regulators. DAI is likely already in use for “prohibited market practices”, so we could be setting ourselves up for catastrophe.
Just gonna paste this here. I have bolded the things I am sure DAI is already used for.
24. Prohibited Transactions
Using the USDC Services for transfers related to the following is prohibited, and Circle reserves the right to monitor for transactions that relate to:
a) any Restricted Persons or persons or entities located in Restricted Territories (as each term is defined in Section 38);
b) weapons of any kind, including but not limited to firearms, ammunition, knives, explosives, or related accessories;
c) controlled substances, including but not limited to narcotics, prescription drugs, steroids, or related paraphernalia or accessories, unless licensed and authorized by the jurisdiction in which the customer is based as well as by the jurisdiction in which the transaction takes place;
d) gambling activities including but not limited to sports betting, casino games, horse racing, dog racing, games that may be classified as gambling (i.e. poker), or other activities that facilitate any of the foregoing, unless licensed and authorized by the jurisdiction in which the customer is based as well as by the jurisdiction in which the transaction takes place;
e) money-laundering or terrorist financing;
f) any sort of Ponzi scheme, pyramid scheme, or multi-level marketing program;
g) goods or services that infringe or violate any copyright, trademark, or proprietary rights under the laws of any jurisdiction;
h) credit repair services, or other services that may present consumer protection risks;
i) court ordered payments, structured settlements, tax payments, or tax settlements;
j) any unlicensed money transmitter activity;
k) layaway systems, or annuities;
l) counterfeit goods, including but not limited to fake or “novelty” IDs;
m) wash trading, front-running, insider trading, market manipulation or other forms of market-based fraud or deceit;
n) purchasing goods of any type from “Darknet” markets, or any other service or website that acts as a marketplace for illegal goods (even though such marketplace might also sell legal goods); or
o) any other matters, goods, or services that from time to time we communicate to you that are unacceptable and which, for example, may be restricted by our and your bank or payment partners
(such transactions, “ Prohibited Transactions ”).
In the event that Circle learns you are making any such Prohibited Transactions, Circle will consider it to be a violation of this Agreement and may suspend or terminate your USDC Account, which can result in the potential forfeit of any US Dollar funds otherwise eligible for redemption.