Don't want to trade it yourself?
Our desk runs DEX portfolios on profit share.
Two Thai businessmen sued Tether in federal court in Manhattan, alleging that it froze 42,417,785.62 USDT▲$0.9991 before a seizure warrant had yet been issued by U.S. authorities.
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint on August 31. It mentions 10 Ethereum addresses blacklisted on October 30, 2025. While the claims remain unproven, Tether has not issued a statement as of September 2.
The plaintiffs claim that the freeze was informally requested by an HSI agent and that no warrant, subpoena, court order, or other process of law had been issued to support the action. Kasamvilas claims to have not known about the freeze until attempting to make a transaction, and that he was sent to an HSI agent’s email address when he contacted Tether.
The complaint alleged that Tether used the Ethereum contract’s addBlackList function to blacklist addresses and subsequently used the destroyBlackFunds function to burn USDT and remove it from circulation.
The businessmen claim to have acquired those assets from a secondary market, arguing that technical control over the contract does not translate into legal control over tokens in third-party wallets.
After judicial approval, on Feb. 19, 2026, Eastern District of North Carolina Magistrate Judge 5:26-MJ-1267-JG issued a warrant for a seizure order. The complaint said the order described how Tether would burn USDT at known addresses, and mint and send the equal amount of tokens to a government-controlled wallet.
Five days later, federal authorities announced the seizure of more than $61 million in USDT linked to alleged crypto investment scams; investigators said the funds had been sent to wallets linked to “pig-butchering” scams on fake trading exchanges.
HSI tracked victim funds through multiple wallets which, according to authorities, were used to obfuscate theired in the asset transfer
The complaint states that the plaintiffs’ USDT, worth $42.4 million, was frozen at the time of the filing, and asks the court to prevent Tether from burning the tokens as there is no record of the disputed USDT entering a government wallet.
The question is whether a private stablecoin issuer may freeze tokens traded on the secondary market in response to informal law-enforcement requests prior to judicial approval.
The plaintiffs also challenge the warrant issued in February as an impermissible retroactive validation of the October freeze, and whether the seizure authority allows the named property to be burned and replaced with newly minted tokens before forfeiture judgment.
The claims include conversion, trespass to chattels, and unjust enrichment, along with the requested relief that includes declaratory and injunctive relief, removal of the blacklist, damages for destroyed tokens and profits derived from the reserves backing the frozen USDT.
The plaintiffs also told the New York court that they sought the return of the assets in North Carolina on July 31, but neither case has yet produced a ruling on ownership, forfeiture, or Tether’s liability.
Source: <a href="https://bitcoinfoundation.org/news/stablecoins/tether-hit-with-42-4m-usdt-lawsuit-over-freeze-before-court-warrant/” target=”_blank” rel=”nofollow noopener”>bitcoinfoundation.org