Tether Faces Suit Over $42.4M USDT Freeze

Two businessmen from Thailand have taken legal action against Tether over the locking of $42.4 million in USDT. They allege the company blocked their wallets for nearly four months before any seizure warrant had been issued.

The lawsuit was submitted in the Southern District of New York on August 31. It raises the question of whether a stablecoin issuer has the power to freeze tokens purchased on the secondary market in the absence of legal proceedings.

Freeze Predated the Warrant

Nutthawat Rukthammachalern and Natthawat Kasamvilas claim that Tether placed ten Ethereum wallets on a blacklist on October 30, 2025. Those addresses held 42,417,785.62 USDT between them.

Tether has just been sued over a $42.4 million USDT freeze by Two Thai businessmen in the SDNY.

Nutthawat Rukthammachalern and Natthawat Kasamvilas say Tether blacklisted their wallets on October 30, 2025 (42,417,785.62 USDT) after an informal request from an HSI agent.

No… pic.twitter.com/hDDgMZRrIv

— Ariel Givner (@GivnerAriel) September 1, 2026

The two men emailed the company two days after the freeze. In response, Tether referred them to a special agent from Homeland Security Investigations (HSI), according to the filing, but provided no legal justification.

A magistrate judge in the Eastern District of North Carolina later signed seizure warrant 5:26-MJ-1267-JG on February 19, 2026. The warrant instructed Tether to destroy the frozen tokens and issue replacements to a government-controlled wallet.

Five days afterward, prosecutors in that district announced a $61 million USDT seizure linked to romance investment fraud. Corporate and intellectual property counsel Ariel Givner brought the case to public attention. She observed that the plaintiffs do not dispute the government's characterization of the coins as scam proceeds.

Reserve Yield at the Center of Dispute

The two men bring five claims, including conversion, trespass to chattels, and unjust enrichment. They acquired the tokens on the secondary market, never created a Tether account, and never agreed to its terms of service.

“An informal request from a law enforcement agent is not legal process of any kind under federal law,” the plaintiff’s complaint filed in the Southern District of New York.

The unjust enrichment count focuses on interest income. According to the filing, Tether holds approximately $130 billion in Treasury securities through Cantor Fitzgerald. It continues to collect coupon payments while frozen holders are unable to redeem.

As for what the plaintiffs seek, the requested relief includes restoration of transferability, a prohibition on burning, disgorgement of that income, and punitive damages.

The timing of freezes has attracted attention in the past. Funds have moved out before blacklists were completed, while the company acted within hours on OFAC sanctions requests. Circle, by contrast, declined to reissue frozen USDC without clear legal authority.

Tether has yet to respond, and no ruling has been made by any judge. Still, USDT’s $183 billion market value means far more than ten wallets could be affected.

Two legal documents will determine what happens next. Tether’s response comes first, followed by a North Carolina ruling on the plaintiffs’ July 31 return application.