Circle Refuses to Burn $381K Frozen USDC in Wisconsin Case, Facing Criminal Complaint

According to an ICIJ investigation published on July 8, Circle has refused to burn and reissue 381,000 frozen USDC tokens in a Wisconsin criminal case, prompting prosecutors to file an unusual complaint against the stablecoin issuer. The dispute began after a romance scam victim in Walworth County was defrauded into sending USDC to a fake platform. While a judge ordered Circle to freeze the wallet, the company declined a follow-up court order to permanently invalidate those tokens and issue replacement USDC to law enforcement, citing lack of technical capability. Circle later asked to dismiss the case, arguing Wisconsin lacked jurisdiction and offering alternative compensation proposals.

The case highlights growing tension between Circle's cautious freezing policy and Tether's more aggressive approach. According to AMLBot data, Tether froze approximately $3.3 billion in USDT across over 7,200 wallets between 2023 and 2025, compared to Circle's $109 million in frozen USDC over the same period. Tether has already reissued around $1.1 billion in cleaned tokens to law enforcement, while Circle does not currently offer a comparable public burn-and-reissue process for third-party wallets, though court filings show it has discussed similar arrangements with federal authorities.