Circle Refused to Recover a Scam Victim’s USDC, Wisconsin’s Criminal Complaint Says
Wisconsin prosecutors have filed a legal grievance in opposition to Circle, alleging the USDC issuer deliberately disobeyed a courtroom warrant to get well roughly 381,000 stolen tokens for a native rip-off sufferer.
The misdemeanor cost sharpens a dispute over how a lot accountability stablecoin issuers bear for returning stolen funds.
A Romance Scam Set the Criminal Complaint Against Circle in Motion
A Walworth County resident obtained an unsolicited textual content in May 2025 from a scammer calling herself Lenora. Posing as a romantic companion, she steered a part of his financial savings into USD Coin (USDC), a dollar-pegged stablecoin, on a bogus funding platform.
According to the courtroom submitting, a county courtroom ordered Circle to freeze the tokens final August, and it complied. In December, nonetheless, a choose ordered Circle to invalidate the tokens and reissue an equal quantity to the sheriff’s workplace.
Circle reportedly refused, and prosecutors charged the $17 billion agency with a misdemeanor depend of obstruction of justice, per the complaint. The firm calls it meritless in a motion to dismiss, citing technical limits and a lack of jurisdiction.
“The instruments which can be at our disposal will not be maintaining with the instruments the criminals are utilizing,” the report says, citing Walworth County prosecutor Thomas Binger.
Milwaukee County detective Scott Simons says Circle declined freeze requests or orders arrived too late in over a dozen instances.
The FBI logged a file $11.4 billion in crypto fraud losses for 2025. More than 18,500 victims misplaced over $100,000 every, at the same time as detection lags AI-driven scams.
Why Tether Returns Stolen Funds While Circle Says It Cannot
Tether, whose USDT is the biggest stablecoin, honors some regulation enforcement requests with out a courtroom order. The agency says it has frozen about $4.7 billion linked to crime.
Its software program may also destroy or burn tokens in legal wallets and problem replacements. Tether reportedly informed ICIJ that the mechanism has returned $1.1 billion to victims.
Meanwhile, Tether’s T3 unit with TRON has frozen over $450 million. US prosecutors additionally seized illicit USDT funds price $61 million in a single case.
The hole displays design and coverage, not blockchain physics. Circle, which was listed on the New York Stock Exchange in June 2025, freezes tokens solely below lawful course of.
The policy is supposed to stop arbitrary or politically motivated interference. That warning has helped USDC gain ground in Europe below the EU’s Markets in Crypto-Assets (MiCA) guidelines.
In distinction, offshore Tether has embraced discretionary cooperation to rebuild its compliance repute.
However, Joshua Cooper-Duckett of Cryptoforensic Investigators says Circle might replace its token code to allow such burns. Circle coverage chief Dante Disparte concedes the instruments exist, writing in April that authorized frameworks for quicker motion don’t.
New York prosecutors see an incentive drawback, too. A January letter to US Senators argued that Circle continues to earn curiosity on reserves backing frozen tokens. Blockchain researcher Yury Serov estimates that at the least 119 million USDC have been frozen.
Circle counters that it lately reached an settlement with federal prosecutors on a sufferer compensation mechanism. The course of would completely freeze tainted tokens and reissue new ones.
Whether that mechanism ever reaches Walworth County might end in a number of misdemeanor expenses. The case might outline how far courts can go in requiring stablecoin issuers to make rip-off victims complete.
Circle didn’t instantly reply to BeInCrypto’s request for remark.
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