Wisconsin prosecutors file criminal complaint against Circle over refusal to return stolen victim funds
The USDC issuer froze a scam victim's stolen stablecoins on a court order, then, prosecutors allege, refused the order to give them back.
State prosecutors in Walworth County, Wisconsin have filed a criminal complaint against Circle Internet Financial, the issuer of the USDC stablecoin, alleging the company refused to comply with a warrant ordering it to recover a scam victim's stolen assets. The complaint, case 2026CM000286, charges contempt of court for disobeying an order. Reporting on the case was published July 8 by the International Consortium of Investigative Journalists.
The case traces to August 2025, when a Walworth County court ordered Circle to freeze approximately 381,000 stolen USDC that had been moved to a private wallet. Circle complied with the freeze. The dispute concerns what came next: prosecutors say the company then refused a court order to recover the funds for the victim. Circle has asked the court to dismiss the complaint, arguing it lacked the technical capability to comply, that prosecutors did not engage with its proposed alternatives, and that the Wisconsin court lacked jurisdiction.
The complaint is a single misdemeanor count. It is nonetheless unusual for a state prosecutor to bring a criminal charge against a major financial firm, a former FBI financial crime specialist told ICIJ.
Not an isolated dispute
In a January 2026 letter to US Senators, New York prosecutors accused Circle of routinely rejecting law enforcement freeze requests absent court orders, and of failing to return funds even after orders were obtained, according to ICIJ's reporting.
Why this matters for victims
Stablecoin issuers sit at one of the few points in the laundering chain where stolen funds can actually be stopped. USDC in a private wallet can still be frozen by the issuer, which is why freeze requests to Circle are a standard step in recovery work. If issuer cooperation narrows to court orders only, and is contested even then, the window between theft and cash-out gets shorter for every victim. The practical lesson from this record: file the freeze request anyway, and get the court order early. Even compliant freezes can stall at the recovery stage, which makes speed at the front of a case matter more, not less.