Circle Seeks Dismissal of Contempt Complaint Over Frozen USDC

Circle, the issuer of the stablecoin USDC, has filed a motion to dismiss a contempt complaint in a Wisconsin court. The company argues that it cannot technically invalidate or reissue frozen USDC tokens held in third-party wallets because it does not possess the private keys.

The dispute stems from an alleged cryptocurrency scam in which a Wisconsin resident lost over 381,000 USDC after transferring them to a wallet controlled by an alleged fraudster. Circle initially froze the assets upon receiving a court warrant but refused to invalidate and reissue the tokens for the victim, leading to the contempt complaint.

Circle claims that it immediately complied with the initial warrant by blocklisting the wallet address, preventing the frozen USDC from being transferred. However, the company argues that the second warrant requires actions that are technically impossible due to its lack of control over third-party wallets.