Circle, the issuer of the USDC stablecoin, is accused of refusing to cooperate with law enforcement efforts to help scam victims recover stolen funds, according to a report by the International Consortium of Investigative Journalists (ICIJ). Unnamed law enforcement officials have raised alarms over instances where Circle allegedly declined to freeze or recover assets suspected to be proceeds of scams. New York prosecutors stated in a letter to Congress that Circle's refusal is financially motivated: by freezing stolen cryptocurrency but not returning it, Circle continues to collect interest on the underlying funds. The allegations span multiple US jurisdictions, including a recent criminal complaint filed by Wisconsin prosecutors and testimony from a Milwaukee County detective who documented over a dozen similar cases nationwide.
Wisconsin Prosecutors File Criminal Complaint Against Circle
State prosecutors in a county in southeastern Wisconsin recently filed a criminal complaint against Circle, alleging that the stablecoin issuer refused to comply with a warrant ordering it to recover a scam victim's stolen assets. Circle responded by arguing that the complaint should be dismissed and reportedly branded it meritless. The complaint represents one of the most direct legal challenges to Circle's policies on asset recovery for fraud victims.
Milwaukee Detective Documents Dozen Cases of Non-Cooperation
Milwaukee County police detective Scott Simons testified that he witnessed over a dozen instances around the United States where Circle either refused a request from law enforcement to freeze victim funds or where a court order intended to force Circle to freeze victim funds failed because it was received too late. Simons' testimony provides a multi-jurisdictional pattern of alleged non-cooperation spanning various law enforcement agencies.
New York Prosecutors Cite Financial Motive in Letter to Congress
New York prosecutors claimed in a letter to Congress that Circle failed to honor court orders seeking to reimburse victims, according to the ICIJ report. The letter states, "Circle's motive for not assisting law enforcement becomes crystal clear: it is financially preferable to only freeze cryptocurrency deemed to have been stolen, but not return the underlying asset to law enforcement or any fraud victim, because Circle can continue to collect the interest through investment of the underlying funds." This statement directly attributes Circle's alleged refusal to a profit-driven rationale tied to interest accrual on frozen assets.
FAQ
What did the ICIJ report accuse Circle of doing?
The International Consortium of Investigative Journalists (ICIJ) reported that Circle, the issuer of the USDC stablecoin, is allegedly declining to cooperate in assisting scam victims recover their funds. Unnamed law enforcement officials raised alarms over instances where Circle refused to freeze or recover assets suspected to be proceeds of scams.
Why do New York prosecutors say Circle refuses to help scam victims?
New York prosecutors stated in a letter to Congress that Circle's refusal is financially motivated. By freezing stolen cryptocurrency but not returning the underlying asset to law enforcement or fraud victims, Circle can continue to collect interest through investment of the underlying funds.
How many cases did Milwaukee detective Scott Simons document?
Milwaukee County police detective Scott Simons testified that he witnessed over a dozen instances around the United States where Circle either refused law enforcement requests to freeze victim funds or where court orders to freeze funds failed because they were received too late.
