TLDR
- Two Thai nationals filed a lawsuit against Tether in New York on August 31, 2026, over a $42.4 million USDT freeze
- Tether allegedly blacklisted ten Ethereum addresses on October 30, 2025, after an informal request from a Homeland Security Investigations agent
- No warrant, court order, or formal legal process was in place when the freeze occurred
- A seizure warrant was later issued in February 2026, instructing Tether to burn the frozen USDT and reissue tokens to a government wallet
- Plaintiffs are seeking damages, an injunction, and disgorgement of income Tether earned on reserves backing the frozen tokens
Two Thai businessmen have sued Tether in a New York federal court, claiming the stablecoin issuer froze $42.4 million in USDT without any legal authorization.
Two Thai Businessmen Sue Tether for Allegedly Illegally Freezing $42.4M USDT at US Request and Transferring Funds to Government Wallet
According to attorney Ariel Givner, two Thai businessmen filed a lawsuit against Tether in the US District Court for the Southern District of… pic.twitter.com/aGzamJ7kHM
— Wu Blockchain (@WuBlockchain) September 2, 2026
The complaint was filed on August 31, 2026, in the U.S. District Court for the Southern District of New York. The plaintiffs are Nutthawat Rukthammachalern and Natthawat Kasamvilas.
The Freeze
According to the lawsuit, Tether blacklisted ten Ethereum addresses holding 42,417,785.62 USDT on October 30, 2025. The plaintiffs say this happened after Tether received an informal request from a Homeland Security Investigations agent.
At the time of the freeze, there was no warrant, court order, or subpoena directing Tether to act. The plaintiffs say they received no prior notice.
When one of the plaintiffs emailed Tether to ask why the funds were locked, the company reportedly directed him to an HSI agent’s email address rather than explaining its legal reasoning.
Tether used a function built into its Ethereum smart contract called addBlackList to block the addresses. A separate function called destroyBlackFunds can be used to burn blacklisted USDT.
The plaintiffs say they bought the tokens on the secondary market and had no direct customer relationship with Tether. They argue that Tether controlling the smart contract does not give it legal authority over tokens held by third parties.
The Warrant and the Seizure
More than three months after the freeze, a magistrate judge in North Carolina issued a seizure warrant on February 19, 2026. The warrant reportedly instructed Tether to burn the frozen USDT and mint equivalent tokens into a government-controlled wallet.
Five days later, federal prosecutors announced the seizure of more than $61 million in USDT. Investigators said the funds were traced to wallets linked to pig butchering investment scams.
The Department of Justice publicly credited Tether for assisting with the transfer. Tether also issued a statement on February 25, 2026, confirming its role in the operation.
The plaintiffs argue the February warrant could not retroactively authorize the October freeze. They also dispute whether a seizure warrant permits burning tokens before a final forfeiture judgment.
As of when the complaint was filed, the plaintiffs say their specific 42.4 million USDT remained frozen and had not yet been transferred to the government wallet.
The lawsuit includes claims of conversion, trespass to chattels, and unjust enrichment. The plaintiffs say Tether continued collecting yield on reserve assets backing the frozen tokens during the entire period.
They are asking the court to order Tether to remove the blacklist, stop any planned burn, pay damages, and hand over income earned on the frozen funds.
Tether has not filed a public response. No judge has ruled on the freeze, the warrant, or the injunction request.
The plaintiffs also filed a separate application in North Carolina on July 31, seeking the return of their tokens. Neither case has reached a judgment on ownership or forfeiture.
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