Circle, the issuer of the stablecoin USDC, is facing legal challenges from law enforcement agencies in Wisconsin and New York for allegedly refusing to assist in the recovery of USDC assets belonging to scam victims. Wisconsin prosecutors have filed criminal charges against Circle, claiming it did not comply with a court order to "void and reissue" approximately 381,000 USDC to a police wallet. Meanwhile, New York prosecutors have criticized Circle for not freezing suspicious funds without a court order and for allegedly profiting from long-term asset freezes. Circle has defended its actions by stating it is "technically unable" to destroy and reissue tokens. However, the company has acknowledged reaching an agreement with federal prosecutors to implement a new mechanism that would allow for the permanent freezing of assets and compensation of victims.