Two Thai businessmen are suing Tether in federal court over approximately $42.4 million in frozen USDT tokens. The lawsuit, filed in the U.S. District Court for the Southern District of New York on August 31, names Nutthawat Rukthammachalern and Natthawat Kasamvilas as plaintiffs and four Tether entities as defendants.
According to the complaint, Tether blacklisted ten Ethereum addresses—nine belonging to Rukthammachalern and one to Kasamvilas—on October 30, 2025. The plaintiffs contend that the blacklisting followed an unofficial request from a Homeland Security Investigations agent without a warrant, court order, or notice to the account holders.
A federal magistrate judge in North Carolina did not sign a seizure warrant until February 19, 2026, nearly four months after the freeze. The warrant outlined a plan for Tether to burn the frozen USDT, mint an equal amount of new tokens, and transmit them to a government-controlled wallet.
Mark Beckett, counsel for the two men, stated that Tether acted on an informal government request with no legal process directed to the company and no notice to the account holders. He emphasized that Tether "has no contractual relationship with our clients, is not a custodian of our clients' USDT, and has no legal right or basis to blacklist our clients' accounts."
The plaintiffs seek a ruling declaring the freeze unlawful, an order preventing destruction of the tokens before any final forfeiture ruling, and damages. They are also seeking income that Tether accumulated while the funds remained frozen.
The complaint argues that freezing customer USDT costs Tether nothing while the company continues to earn yield on corresponding reserves held primarily in US Treasury securities. The plaintiffs contend this creates a financial incentive for Tether to freeze and burn tokens.
Tether responded with a statement saying the lawsuit 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." The company noted that the USDT smart contract includes a blacklist function allowing Tether to flag addresses on blockchains including Ethereum.
