Circle Faces Criminal Charges for Refusing to Burn 381,000 USDC, Raising Questions About Fund Recovery Policy

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According to an ICIJ investigation published on July 8, Circle has faced criminal charges from Wisconsin prosecutors for refusing to burn and reissue 381,000 frozen USDC tokens in a romance scam case. After a judge ordered the company to invalidate the stolen tokens and issue fresh replacements to the Walworth County Sheriff's Office, Circle declined, arguing it lacks the technical ability to burn and reissue USDC held in third-party wallets. The case highlights a stark difference in fund recovery policies: AMLBot data shows Tether froze approximately $3.3 billion in USDT across more than 7,200 wallets between 2023 and 2025, while Circle froze only $109 million in USDC over the same period. Tether supports a burn and reissue process for stolen tokens, whereas Circle currently does not offer the same mechanism for third-party wallets, leaving scam victims waiting while funds potentially move beyond recovery.
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