Two Thai businessmen have filed suit against Tether in U.S. District Court for the Southern District of New York, claiming the stablecoin issuer froze $42.4 million of their USDT without legal authorization. According to the complaint filed on August 31, Tether blacklisted ten Ethereum addresses holding a combined $42,417,785.62 in USDT on October 30, 2025—nearly four months before any court-issued warrant existed.
A seizure warrant eventually arrived on February 19, 2026, issued by a magistrate judge in the Eastern District of North Carolina in connection with a separate investigation into pig-butchering investment scams. Investigators alleged the wallets had received proceeds from romance-driven cryptocurrency fraud schemes. The plaintiffs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, say they were not part of any scheme and received no notice of the freeze until after their funds were already locked.
Tether's Freezing Authority
The lawsuit challenges Tether's centralized power to freeze funds unilaterally through a freeze function in USDT's smart contract. Tether has coordinated with OFAC and U.S. law enforcement on major asset freezes, including a $344 million freeze in April tied to illicit activity and the blacklisting of 371 addresses freezing roughly $515 million in USDT over 30 days in May. The company has stated it has supported thousands of law enforcement cases globally.
What the Plaintiffs Seek
The complaint seeks declaratory relief, an injunction to prevent Tether from burning or reissuing the disputed USDT, damages, disgorgement of any income Tether earned on reserves backing the frozen tokens, and punitive damages. The plaintiffs are also asking the court to remove their addresses from the blacklist.
On July 31, the investors filed a separate application in North Carolina seeking the return of the funds. Neither that proceeding nor the New York suit has yet produced a ruling on fund ownership or Tether's liability.
The Central Question
Prosecutors say more than $61 million in USDT was tied to wallets linked to investment fraud under the North Carolina warrant. The plaintiffs argue their ten addresses were swept up in a broader dragnet without individualized evidence connecting them to any scheme. Whether the wallets received proceeds directly from the scam or simply transacted with addresses that had done so will likely be a key factual dispute as the case progresses.
