TechFlow News, July 9, according to the International Consortium of Investigative Journalists (ICIJ), stablecoin issuer Circle was 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; the court issued a warrant last December requiring Circle to transfer the frozen assets to a law enforcement wallet, but Circle refused to execute, citing "technical inability to burn and reissue tokens."
New York prosecutors had previously written to the U.S. Senate, accusing Circle of repeatedly refusing requests to freeze assets without a warrant, and questioning its profit motive—Circle currently holds at least 119 million frozen USDC and can continuously earn interest income. In response, Circle denied the allegations, stating that the Wisconsin court lacks jurisdiction, and indicated it has reached a preliminary agreement with federal prosecutors on 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.
