Two Thai businessmen have sued Tether over the freezing of approximately $42.4 million in USDT, alleging the stablecoin issuer restricted their assets months before U.S. authorities obtained a seizure warrant. The lawsuit challenges whether Tether had legal authority to blacklist the tokens before formal judicial process was in place.
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint against four Tether entities on August 31 in the U.S. District Court for the Southern District of New York, according to the federal case docket. The dispute concerns 42,417,785.62 USDT held across 10 Ethereum addresses that the plaintiffs say Tether froze on October 30, 2025.
Lawsuit Challenges Freeze Before Warrant
According to the complaint, the blacklist followed an informal request from a Homeland Security Investigations agent rather than a warrant, subpoena or court order directed at Tether. The plaintiffs argue that the absence of formal legal process at the time makes the October freeze unlawful, although those allegations have not been adjudicated.
A magistrate judge in the Eastern District of North Carolina later issued a seizure warrant on February 19, 2026, roughly four months after the disputed freeze. That timeline is central to the plaintiffs’ case because they contend the later warrant could not retroactively authorize Tether’s earlier action.
The warrant formed part of a wider investigation into cryptocurrency allegedly connected to investment scams commonly described as “pig butchering.” The U.S. Justice Department subsequently announced that federal agents had seized more than $61 million in USDT traced to wallets allegedly associated with laundering proceeds from such schemes. The DOJ specifically credited Tether with assisting authorities in transferring the seized assets.
Stablecoin Freeze Powers Face Legal Test
The lawsuit puts Tether’s centralized control over USDT transfers at the center of a property and due-process dispute. Although USDT moves across public blockchains, Tether retains technical capabilities that can prevent specified addresses from transferring tokens, allowing the issuer to cooperate rapidly with law enforcement.
Tether has used those capabilities extensively in previous enforcement actions. In February, the company said it had frozen about $4.2 billion in USDT associated with suspected illicit activity, much of it following requests from authorities. The current dispute does not challenge whether Tether can technically freeze tokens, but under what legal circumstances that authority may be exercised.
No court has yet determined whether Tether acted improperly in this case, and the complaint represents the plaintiffs’ allegations rather than established findings. The eventual ruling could provide important guidance on the boundary between private stablecoin compliance controls and formal government seizure procedures, particularly when token holders dispute the basis for an issuer-level freeze.
