Wisconsin prosecutors have filed a criminal complaint against stablecoin issuer Circle, accusing the company of refusing to comply with a court order tied to stolen USDC. The dispute centers on what should happen after funds are frozen: whether Circle can be compelled to invalidate the existing tokens and issue the same amount of new USDC to a wallet controlled by law enforcement. Circle has denied wrongdoing and asked the court to dismiss the case.
Freeze order was carried out, replacement order triggered the dispute
Court records link the case to an alleged romance-investment scam involving a Walworth County resident. Investigators said the victim received unsolicited messages from a woman identifying herself as Lenora, who gained his trust and persuaded him to convert part of his savings into USDC and send the funds to what authorities later described as a fraudulent investment platform.
In August 2025, a Walworth County court ordered Circle to freeze about 381,000 USDC connected to the alleged fraud after the tokens had reached a private crypto wallet. Circle said it complied with that freeze request. Tension rose in December 2025, when a judge signed another warrant directing Circle to invalidate the frozen USDC and issue an equal amount of new tokens to a wallet controlled by the Walworth County Sheriff’s Office.
Circle says it could not technically execute the disputed warrant
In its defense, Circle argued that it complies with lawful requests where possible but lacked the technical ability to execute the disputed order. The company also said the Wisconsin court does not have jurisdiction over the matter. Circle added that prosecutors did not engage with its proposals for alternative victim compensation.
In a court filing, Circle said it had reached a general agreement with federal prosecutors on a compensation framework. Under that approach, some frozen USDC could remain permanently frozen while equivalent replacement tokens would be issued to eligible victims. The source material does not say whether that mechanism has already been implemented or how it would interact with the Wisconsin case.
Rare complaint draws attention to stablecoin compliance limits
The complaint includes one misdemeanor charge, according to court filings. Karen Greenway, a former FBI agent and financial crime expert, said a criminal complaint of this type against a major financial company is highly unusual. That has pulled the case into the view of both legal observers and the crypto sector.
The Wisconsin matter is not Circle’s only clash over cooperation with law enforcement. In January, New York prosecutors told U.S. senators that Circle had declined requests to freeze USDC without court authorization. They also alleged that the company failed to comply with some court orders seeking the return of stolen digital assets. Circle has defended its compliance policy, saying it freezes USDC only through lawful legal process in order to protect customers from arbitrary or politically motivated interference, and it rejected claims of misconduct in the Wisconsin case.
Singapore operation stopped more than $2.9 million in losses
While the U.S. dispute focuses on the scope of a court order, Singapore authorities highlighted a separate enforcement model built on coordinated action. In June 2026, police worked with Coinbase, Coinhako, Gemini, Independent Reserve, OKX, StraitsX, and Upbit to prevent more than $2.9 million in potential crypto scam losses.
Investigators also used blockchain intelligence from Chainalysis and TRM Labs to identify more than 130 victims across investment, impersonation, and employment scams. Singapore police shared intelligence with the FBI and Australia’s New South Wales Police Cybercrime Squad as part of cross-border investigations. Officials said the effort showed the practical value of coordination between crypto exchanges, blockchain analytics firms, and international law enforcement, while urging the public to use ScamShield, enable two-factor authentication, verify payment requests, and set transaction limits.