Wisconsin prosecutors charge Circle after stablecoin issuer declines to help recover fraud losses

Wisconsin prosecutors have filed criminal charges against stablecoin issuer Circle, alleging it refused to comply with a court order tied to the recovery of funds for fraud victims, Huoxing Finance reported. The case stems from a Wisconsin victim who lost about 381,000 USDC. A court warrant issued in December directed Circle to move frozen assets to law-enforcement-controlled wallets. Circle declined, arguing it is technically impossible to burn the tokens and reissue them. The dispute follows earlier scrutiny in New York, where prosecutors sent a letter to the U.S. Senate accusing Circle of repeatedly rejecting unfreezing requests that were not backed by court orders and raising questions about the company's financial incentives. Circle is said to hold at least 119 million USDC in frozen balances, which continue to generate interest income. Circle has rejected the accusations, saying the Wisconsin court lacks jurisdiction. The company added that it has reached a preliminary understanding with federal prosecutors on a victim-compensation mechanism. Crypto tracking specialists say Circle could enable token burning and reissuance through a straightforward code update, challenging the company's claim of technical infeasibility.