Tether Sued Over $42 Million USDT Freeze

Two Thai businessmen have sued Tether over a $42.4 million freeze of Tether (USDT). They say the issuer locked their wallets almost four months before a seizure warrant existed.

The complaint landed in the Southern District of New York on August 31. It asks whether an issuer can immobilize tokens bought on the open market without legal process.

A Freeze That Arrived Before the Warrant

Nutthawat Rukthammachalern and Natthawat Kasamvilas say Tether blacklisted 10 Ethereum addresses on October 30, 2025. Those wallets held 42,417,785.62 USDT.

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

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They emailed the company two days later. Tether replied by pointing them to a Homeland Security Investigations (HSI) special agent. However, it gave no legal basis, the filing states.

A magistrate judge in the Eastern District of North Carolina then issued seizure warrant 5:26-MJ-1267-JG on February 19, 2026. It directed Tether to burn the frozen tokens and reissue them to a government wallet.

Five days later, prosecutors there announced a $61 million USDT seizure traced to romance investment fraud. Corporate and intellectual property counsel Ariel Givner surfaced the filing. She noted the plaintiffs never dispute that the government calls those coins scam proceeds.

Reserve Yield Becomes the Sharp Edge

The two men plead five claims, among them conversion, trespass to chattels, and unjust enrichment. They bought the tokens secondhand, never opened a Tether account, and never accepted 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 enrichment count targets interest. Tether holds roughly $130 billion in Treasury securities through Cantor Fitzgerald, the filing says. It keeps collecting the coupon while frozen holders cannot redeem.

Meanwhile, the relief sought covers restored transferability, a ban on any burn, disgorgement of that yield, and punitive damages.

Freeze timing has drawn scrutiny before. Funds have escaped before blacklists complete, while the company moved within hours on OFAC sanctions requests. Circle, by contrast, refused to reissue frozen USDC absent clear legal authority.

Tether has not answered, and no judge has ruled. Yet USDT’s $183 billion market value puts far more than ten wallets in scope.

Two filings will shape what follows. Tether’s response comes first, then a North Carolina ruling on the plaintiffs’ July 31 return application.