Stablecoin issuer Tether faces a federal lawsuit after two Thai businessmen said it froze $42.4 million in Tether (USDT) nearly four months before authorities obtained a seizure warrant.
Key Points:
- Two Thai businessmen say Tether blacklisted 10 Ethereum (ETH) addresses holding 42.4 million USDT before any warrant existed.
- A later North Carolina warrant ordered the tokens burned and reissued to a government wallet.
- The lawsuit seeks restored access, damages, reserve yield and punitive damages, while Tether has not yet responded.
Tether Freeze Timeline
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint Aug. 31 in the Southern District of New York. They say Tether blacklisted 10 Ethereum addresses holding 42,417,785.62 USDT on Oct. 30, 2025.
The men contacted Tether two days later, and the company directed them to a Homeland Security Investigations agent without giving a legal basis for the freeze, according to the complaint.
A North Carolina magistrate judge issued a seizure warrant Feb. 19, 2026, directing Tether to burn the tokens and reissue them to a government wallet.
Five days later, prosecutors announced a $61 million USDT seizure tied to alleged romance investment fraud. Attorney Ariel Givner, who highlighted the filing, noted that the plaintiffs do not dispute the government’s claim that the tokens were scam proceeds. Their lawsuit includes conversion, trespass to chattels and unjust enrichment claims.
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USDT Legal Stakes
The plaintiffs want transferability restored, any burn blocked, reserve yield disgorged, plus damages and punitive damages. Their complaint argues that “an informal request from a law enforcement agent is not legal process of any kind under federal law.” They say they bought the USDT secondhand and never accepted Tether’s terms.
The filing says Tether holds roughly $130 billion in Treasury securities through Cantor Fitzgerald and continues collecting coupon income while frozen holders cannot redeem.
Tether has not responded, and no judge has ruled on the merits. Its New York response and a North Carolina ruling on the plaintiffs’ Jul. 31 return application will shape the next phase.
Tether’s freezing practices have drawn scrutiny before, including cases where funds moved before blacklists were completed and instances when it acted within hours of OFAC requests. Circle took a different approach in one case, refusing to reissue frozen USD Coin (USDC) without clear legal authority.
Tether officials contacted Yellow.com with a statement responding to the lawsuit. “The new lawsuit against Tether is a baseless attempt to interfere with Tether’s important work with global law enforcement, including the Department of Justice, to prevent the unlawful use of USDT.”
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