Circle, the company behind the USDC stablecoin, is facing accusations from law enforcement officials who say it has not adequately helped scam victims recover stolen funds. The claims were detailed in a report by the International Consortium of Investigative Journalists and include a criminal complaint filed in Wisconsin as well as criticism from prosecutors in New York.
Wisconsin complaint
According to the report, prosecutors in Milwaukee County, Wisconsin, recently filed a criminal complaint against Circle. The complaint alleges that the company refused to comply with a warrant that ordered it to recover assets stolen from a scam victim.
Circle has pushed back against the case. In response, the company reportedly argued that the complaint should be dismissed and described it as meritless.
Law enforcement concerns
The ICIJ report said some law enforcement officials have become concerned that Circle is declining to cooperate in certain efforts to freeze or recover funds believed to be tied to scams. Those concerns center on cases in which USDC or related assets could potentially have been frozen before being moved further.
Milwaukee County police detective Scott Simons told the publication he has seen more than a dozen similar cases across the United States. He said those cases involved either Circle refusing requests from law enforcement to freeze victim funds, or court orders aimed at forcing a freeze arriving too late to be effective.
Claims raised in Congress letter
The report also said New York prosecutors made similar accusations in a letter sent to Congress. According to that account, the prosecutors said Circle failed to honor court orders that sought reimbursement for victims.
The letter, as cited in the report, argued that Circle had a financial incentive not to assist fully in returning funds. It claimed the company could benefit more from freezing cryptocurrency identified as stolen without returning the underlying assets, because it could continue earning interest through investment of those backing funds.
What is known and what remains disputed
The allegations outlined in the report are claims by prosecutors and law enforcement officials, and the dispute appears unresolved. The source article did not indicate that the Wisconsin complaint had been adjudicated, nor did it describe any final ruling on the allegations from New York prosecutors.
The case adds to broader scrutiny of how stablecoin issuers respond when courts and police seek rapid intervention in fraud cases. In this instance, the central dispute is whether Circle complied with legal demands to help recover scam-related funds, a claim the company is contesting.
Source: dailyhodl.com