All privacy protocols should take this matter seriously. Circle directly blacklisted the entire zama cUSDC contract, involving $12.6 million. From what we know, this seems to be related to the hacker address from the Overnight Finance attack. When this address deposited USDC into zama's private contract, it wasn’t yet on the sanctions list. However, last night, a court issued a restriction order on the hacker address, and Circle, without filtering the funds, directly blacklisted the entire contract. Although this approach is quite rough, it currently doesn’t have much impact on regular users since over 99% of the funds in this contract are from the hacker. But who knows what might happen next time? zama stated that they have the capability to separate the funds, splitting the 99% from the 1%, and then communicating with Circle. This should resolve the issue. The takeaway for the privacy sector is that the ability to separate “good money” from “bad money” after the fact is extremely important. Most privacy protocols today can preemptively ban addresses that are already sanctioned, restricted, or flagged for money laundering, targeting only those marked addresses. But in cases like zama’s, things get tricky. If it were a traditional mixer logic, I understand it would be nearly impossible to achieve post-event separation.