Circle Internet Group (NYSE: CRCL), the crypto company popular for its USDC stablecoin, is facing a criminal complaint in a U.S. state for allegedly refusing to help scam victims. The Interna
Circle Internet Group (NYSE: CRCL), the crypto company popular for its USDC stablecoin, is facing a criminal complaint in a U.S. state for allegedly refusing to help scam victims.
The International Consortium of Investigative Journalists (ICIJ) reported on July 8 that Wisconsin state prosecutors filed a criminal complaint on Apr. 20 against the crypto company for allegedly refusing to comply with a court warrant ordering it to recover a scam victim’s stolen assets.
Related: Explained: What is a stablecoin?
The entire episode dates back to May 2025 when a resident in Wisconsin's Walworth County received an unsolicited text message from a person calling themself "Lenora."
In an alleged instance of pig butchering, the Walworth County resident was led to believe that Lenora was romantically interested in him, and the individual bragged about making high profits in cryptocurrency and even encouraged the resident to invest in a website called Crypto.com.
The man purchased over $381,000 in USDC on Crypto.com and, once urged by Lenora, transferred the funds to a private wallet not controlled by him, as per the complaint.
While Lenora told the victim his investment was worth over $1.5 million, the man was later told that his account was frozen and he would have to pay an additional $23,000-$25,000 to recover his money.
That's when the man became suspicious of becoming a scam victim and reported the incident to the Wisconsin Department of Financial Institutions, Division of Securities.
Trending on TheStreet Roundtable:In August 2025, Detective Timothy Kuchta of the Walworth County Sheriff’s Department obtained a warrant from the Walworth County Circuit Court ordering Circle to freeze the victim's USDC held in a wallet. Circle immediately notified Kuchta that it had frozen the USDC. The USDC remains frozen to this day, the complaint mentioned.
In December 2025, Walworth County Circuit Court Judge Kristine Drettwan signed a warrant requiring Circle to appear before her and ordered the company to facilitate the seizure of the victim's USDC and invalidate that USDC so that it had no value.
The warrant also ordered Circle to issue approximately $381,000 in new USDC to compensate the victim and transfer that new USDC to a digital wallet owned by the Walworth County Sheriff’s Department. This procedure is known as “burn and reissue.”
Circle told Kuchta it didn't hold the private keys necessary to transfer the victim's USDC to the Sheriff’s Department. It also refused to invalidate the stolen USDC or issue new USDC to compensate the victim, the complaint said.
In a June 2026 filing, Circle called the Wisconsin complaint "meritless" and requested the court to dismiss it. The crypto firm said it didn't have the technical capability to comply with the order and that prosecutors did not engage with the company’s attempt to find alternatives for compensating the victim. Circle even went on to argue the Wisconsin court did not have jurisdiction to issue the order.
A Circle spokesperson told TheStreet Roundtable, "Circle is a regulated company that complies with sanctions, law enforcement orders, and court-mandated requirements, and has a strong track record of cooperating with law enforcement agencies across the United States and internationally. Regarding seizure requests, the legal structures that would authorize stablecoin issuers to act faster—while preserving due process and property rights—do not yet fully exist."
The spokesperson added, "As Circle's Chief Strategy Officer Dante Disparte wrote in an April blog post on this topic, that is a policy gap, not a cooperation gap. Circle has filed a motion in the Walworth County, Wisconsin, proceeding, which is a matter of public record. We cannot comment further on that case or other legal proceedings."
The ICIJ report also mentioned that New York State prosecutors had expressed their frustration with Circle over the same issue of not freezing USDC linked to bad actors in a January letter to U.S. senators.
The prosecutors alleged Circle finds it "financially preferable" to freeze stolen crypto but not return the underlying asset to law enforcement or fraud victims because it can keep collecting the interest through investment of the underlying funds.
The Circle stock slipped as much as 2% today to hit the intraday low of $61.67 on July 9.
At press time, the stock was trading at $63.78.
Related: Analyst names Bitcoin buyer that could be bigger than Saylor
