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▲ Circle (CRCL), romance scam, cryptocurrency fraud, cryptocurrency lawsuit/AI-generated image
Circle, the issuer of USDC, has been criminally charged for allegedly refusing a court order to recover approximately 381,000 USDC for a romance scam victim, bringing the responsibility of stablecoin issuers for victim relief to the forefront of legal debate.
According to crypto media outlet BeInCrypto on July 9 (local time), the Wisconsin State Prosecutor's Office charged Circle with a misdemeanor of obstruction of justice for intentionally failing to comply with a court warrant. A Walworth County resident fell victim to a romance scam in May 2025 after receiving a text message from someone who introduced themselves as Lenora. Following the scammer's inducement, the victim converted some of their savings into the dollar-pegged stablecoin USDC and invested it in a fake investment platform.
Court records show that the County Court ordered Circle to freeze the victim's assets in August last year, and Circle complied. In December of the same year, the judge ordered the USDC to be invalidated and the same amount of assets to be re-issued to the sheriff's office. However, Circle reportedly refused to do so, and the prosecutor's office filed criminal charges against Circle, a company valued at $17 billion. Circle countered by calling it an "unsubstantiated accusation," citing technical limitations and lack of jurisdiction, and requested its dismissal.
Walworth County District Attorney Thomas Binger stated, "The means we have available cannot keep up with the means criminals use." Milwaukee County Detective Scott Simons revealed that Circle had refused freeze requests or that orders arrived too late in over 12 cases. The U.S. Federal Bureau of Investigation (FBI) reported that cryptocurrency fraud losses reached a record high of $11.4 billion in 2025, with over 18,500 victims losing more than $100,000.
Tether is adopting a different approach. It stated that it cooperates with some law enforcement requests regarding USDT without a court order, freezing approximately $4.7 billion in crime-linked funds. It also has the ability to burn tokens from criminal wallets and re-issue the same quantity, explaining that it has returned $1.1 billion to victims through this method. Tether's T3 organization and TRON have also frozen over $450 million.
Circle operates a policy of freezing tokens only when there is due process, and Dante Disparte, its chief policy officer, stated that while asset burning technology exists, there is a lack of a legal framework to support rapid response. Circle claims to have recently agreed with federal prosecutors on a victim compensation procedure that involves permanently freezing tainted tokens and issuing new ones. The Walworth County case is leading to a legal dispute over the extent to which stablecoin issuers can be ordered to return assets from fraud victims.
[Article Key Summary]
-The Wisconsin State Prosecutor's Office charged Circle with a misdemeanor of obstruction of justice for refusing a court order to recover approximately 381,000 USDC in victim assets.
-Tether stated that it froze approximately $4.7 billion in crime-linked funds and returned $1.1 billion to victims through token burning and re-issuance.
-Circle argued technical limitations and lack of jurisdiction, requesting the dismissal of the charges, and stated that it has established a victim compensation procedure with federal prosecutors.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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