Tether sued over alleged unlawful $42.4M USDT freeze

Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York. The plaintiffs allege that Tether unlawfully froze approximately 42.4 million USDT across ten Ethereum addresses on October 30, 2025, without a valid court warrant or subpoena.

The lawsuit claims the freeze was prompted by an informal request from an agent of Homeland Security Investigations (HSI) rather than a formal legal order. A seizure warrant was not issued by a magistrate judge until February 19, 2026, creating a four-month gap between the asset restriction and judicial authorization. The plaintiffs, who acquired the tokens through secondary market transactions, are seeking declaratory relief, an injunction to prevent the burning of the tokens, and damages.

Tether has dismissed the lawsuit as a ‘baseless attempt to interfere with Tether’s important work with global law enforcement.’ The dispute highlights broader legal questions regarding the authority of centralized stablecoin issuers to blacklist, burn, or reissue assets based on informal law enforcement inquiries.