Tether faces a lawsuit in U.S. District Court for the Southern District of New York over $42.4 million in frozen USDT after the stablecoin issuer blacklisted 10 Ethereum addresses without a warrant or court order.
Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas allege Tether froze 42,417,785.62 USDT on Oct. 30, 2025, following an informal request from Homeland Security Investigations. Kasamvilas discovered the restriction when attempting to move the funds and was directed to an HSI email address.
The brothers say the freeze violated their rights because no warrant, court order, subpoena or prior notice preceded it. Their complaint, filed by attorney Ariel Givner, challenges Tether's unilateral authority to blacklist wallets.
A North Carolina federal court issued a seizure warrant on Feb. 19, 2026—nearly four months after the initial freeze. The warrant instructed Tether to burn the frozen USDT and create an identical amount in a government-controlled wallet. Days later, authorities announced they had seized over $61 million in USDT tied to pig-butchering scams and publicly thanked Tether for cooperation.
But the plaintiffs argue the February warrant cannot retroactively validate the October freeze. They also question whether the warrant legally empowered Tether, a private company, to burn and reissue their USDT.
The brothers acquired the USDT through legitimate business transactions and were not Tether customers. They argue that technical capability to blacklist a wallet does not grant Tether the legal right to seize or control tokens owned by others.
Their complaint seeks an order preventing Tether from burning the USDT, unblacklisting their wallets, and damages if the tokens are destroyed. They also demand Tether return any income earned from reserves backing their frozen USDT.
Tether's formal response to the complaint is the next expected development. The case raises a core question: whether stablecoin issuers can freeze user funds on government request without prior judicial authorization.
