{"id":75206,"date":"2026-07-10T06:47:56","date_gmt":"2026-07-10T06:47:56","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/circle-accused-by-new-york-and-wisconsin-prosecutors-of-hindering-usdc-recovery-for-scam-victims\/"},"modified":"2026-07-10T06:47:56","modified_gmt":"2026-07-10T06:47:56","slug":"circle-accused-by-new-york-and-wisconsin-prosecutors-of-hindering-usdc-recovery-for-scam-victims","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/circle-accused-by-new-york-and-wisconsin-prosecutors-of-hindering-usdc-recovery-for-scam-victims\/","title":{"rendered":"Circle Accused by New York and Wisconsin Prosecutors of Hindering USDC Recovery for Scam Victims"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"@container mb-[25px] rounded-sm overflow-clip py-0.5 pr-0.5 pl-2.5 bg-success-100\">\n<div class=\"flex flex-col gap-m overflow-clip rounded-[6px] !bg-success-10 p-3 @[420px]:p-m\">\n<h2 class=\"m-0 flex items-center gap-s text-[19px] !text-[#1c1c1c] md:text-[20px]\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"10\" viewbox=\"0 0 16 10\" fill=\"none\" class=\"shrink-0 text-success-100\" aria-hidden=\"true\"><path d=\"M1 1.5h14\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><path d=\"M1 8.5h10\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><\/svg><span>Key Takeaways<\/span><\/h2>\n<ul class=\"m-0 flex list-none flex-col gap-m pl-0\">\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Wisconsin charged Circle over a warrant to seize 381,000 USDC stolen in a crypto romance scam.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Circle holds 119 million frozen tokens, with critics noting it earns interest on backing reserves.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Circle reached a federal deal to permanently freeze flagged USDC and issue new tokens to victims.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2>State Prosecutors Clash With Stablecoin Giant<\/h2>\n<p>The USDC <span>stablecoin<\/span> issuer, Circle, faces mounting criticism from prosecutors in Wisconsin and New York who say the company has declined or delayed complying with court orders aimed at recovering funds.<\/p>\n<p>According to an ICIJ <a href=\"https:\/\/www.icij.org\/investigations\/coin-laundry\/crypto-giant-circle-rebuffed-efforts-to-help-scam-victims-police-say\/\" target=\"_blank\" rel=\"noopener noreferrer\">report<\/a>, Thomas Binger, a prosecutor in Walworth County, Wisconsin, has filed a misdemeanor criminal complaint accusing Circle of refusing to comply with a December warrant. The warrant ordered the company to \u201cfacilitate the seizure\u201d of roughly 381,000 USDC stolen from a victim of a romance-investment scam.<\/p>\n<p>The warrant reportedly directed Circle to invalidate the frozen tokens sitting in a suspect\u2019s digital wallet and issue an equivalent amount of new USDC to a wallet controlled by the local sheriff\u2019s office. Circle froze the funds immediately when ordered last August but later said it lacked the technical ability to burn and reissue tokens.<\/p>\n<p>The allegations add to a growing list of concerns raised about Circle in recent months. As previously reported by <span>Bitcoin.com<\/span> News, prominent <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-a-blockchain\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">blockchain<\/a> investigator ZachXBT accused the company of compliance lapses tied to more than $420 million in illicit USDC flows that Circle allegedly failed to freeze across 15 documented cases dating back to 2022. Circle also faced criticism for <a href=\"https:\/\/news.bitcoin.com\/circle-faces-lawsuit-after-drift-exploit-over-claims-it-took-no-action-to-freeze-the-funds\/\">reportedly<\/a> not freezing stolen USDC linked to the Drift Protocol exploit, further fueling questions about the firm\u2019s responsiveness to on\u2011chain crime.<\/p>\n<p>However, in response to the latest allegations, Circle maintains that it freezes assets only when compelled through a \u201clawful process,\u201d arguing this policy protects users from arbitrary or politically motivated interference. The company called the complaint \u201cmeritless,\u201d arguing that prosecutors misunderstood its capabilities and failed to engage with alternative solutions.<\/p>\n<p>In New York, prosecutors wrote a letter to U.S. senators in January accusing Circle of declining law enforcement freeze requests unless they are accompanied by a court order. They also accused the company of failing to return stolen <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-are-stablecoins\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">stablecoins<\/a> even after being ordered to do so by courts.<\/p>\n<p>Some critics argue that Circle\u2019s reluctance to act is driven by financial incentives. Frozen assets continue to generate interest from the reserves backing USDC. <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-is-a-blockchain\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">Blockchain<\/a> researcher Yury Serov estimates the value of frozen USDC at a minimum of 119 million tokens.<\/p>\n<p>Crypto-forensics experts say Circle could update its token governance code to support burning and reissuing, but Circle has not confirmed whether such an upgrade is planned.<\/p>\n<p>Nevertheless, in a footnote to its Wisconsin filing, Circle reportedly revealed it had reached a general agreement with federal prosecutors on a new mechanism to compensate victims. Under this arrangement, flagged <a href=\"http:\/\/www.bitcoin.com\/get-started\/what-are-stablecoins\/\" class=\"lar_link lar_link_outgoing\" target=\"_blank\" rel=\"noopener noreferrer\">stablecoins<\/a> could be permanently frozen, <a href=\"https:\/\/news.bitcoin.com\/experts-say-circles-reversibility-feature-will-align-usdc-with-traditional-finance\/\">removing them from circulation<\/a>. Circle would then mint new tokens of equal value and issue them to victims.<\/p>\n<p>Functionally, this mirrors the burn-and-reissue process critics say Circle should already support. Circle did not say whether this mechanism could be applied to the Wisconsin case or whether the agreement is part of a binding settlement.<\/p>\n<\/p><\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/circle-accused-by-new-york-and-wisconsin-prosecutors-of-hindering-usdc-recovery-for-scam-victims\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways Wisconsin charged Circle over a warrant to seize 381,000 USDC stolen in a crypto romance scam. Circle holds 119 million frozen tokens, with critics noting it earns interest on backing reserves. Circle reached a federal deal to permanently freeze flagged USDC and issue new tokens to [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":75207,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/75206"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=75206"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/75206\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/75207"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=75206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=75206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=75206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}