Circle Refuses to Assist in Recovering Fraudulent Funds, Faces Criminal Charges from Wisconsin Prosecutors

According to the International Consortium of Investigative Journalists (ICIJ), stablecoin issuer Circle has been criminally charged by Wisconsin prosecutors for refusing to comply with a court order to assist in recovering funds for fraud victims. A victim in Wisconsin was defrauded of approximately 381,000 USDC. Last December, the court issued an order requiring Circle to transfer the frozen assets to a law enforcement wallet, but Circle refused to comply, citing "technical inability to burn and reissue tokens." Previously, New York prosecutors also wrote to the U.S. Senate, accusing Circle of repeatedly refusing requests to freeze assets without a court order and questioning its profit motive—Circle currently holds at least 119 million frozen USDC, from which it can continue to earn interest income. In response, Circle denied the allegations, stating that the Wisconsin court lacks jurisdiction, and indicated that it has reached a preliminary agreement with federal prosecutors regarding a victim compensation mechanism. Cryptocurrency tracking experts pointed out that Circle could achieve token burning and reissuance by updating code, casting doubt on its claim of technical inability.