Prosecutors slam Circle for refusing USDC freeze order

Prosecutors in Wisconsin and New York are publicly criticizing Circle Internet Financial, the issuer of the USDC stablecoin, for refusing to comply with court orders aimed at recovering stolen funds for fraud victims. The escalating dispute, detailed in a recent investigation, highlights a significant tension between law enforcement and a major cryptocurrency firm over the enforceability of legal warrants in the digital asset space.

The central case involves a romance scam in Walworth County, Wisconsin, where a resident was defrauded of approximately $381,000 in USDC. After investigators traced the funds, a judge ordered Circle to freeze the wallet containing the tokens, which the company did. However, when the court later ordered Circle to invalidate, or "burn," the frozen tokens and issue an equivalent amount of new USDC to the Walworth County Sheriff's Office, the company refused.

In response, Wisconsin prosecutors filed a criminal complaint against Circle in April 2026, alleging the firm intentionally disobeyed a court order. Circle has moved to dismiss the complaint, calling it meritless. The company argues the Wisconsin court lacks jurisdiction and that it does not possess...