Two Thai businessmen have filed a lawsuit against stablecoin issuer Tether in a New York district court. The plaintiffs claim that Tether illegally froze $42.4 million in Tether USDt (USDT) in October as part of a broader case linked to a pig butchering scheme.
According to a Monday court filing, the plaintiffs state that Tether froze the funds following an informal request from US Homeland Security Investigations, doing so without a warrant. Authorities in the Eastern District of North Carolina subsequently issued a seizure warrant for the funds in February as part of a $61 million pig butchering case. That warrant directed the tokens to be burned and reissued to a government wallet.
While the plaintiffs do not dispute their involvement in the investment scam, the lawsuit challenges the freezing authority of stablecoin issuers. The legal action asks authorities to unfreeze the funds and award potential punitive damages.
Attorney Ariel Givner noted in a Wednesday social media post that the complaint does not deny government claims that the coins are scam proceeds. Instead, the filing argues that Tether froze secondary-market holders first while continuing to earn Treasury yield on the reserves, receiving a warrant only later that plaintiffs argue does not authorize a private issuer to freeze, burn, or reissue tokens.
