Tether USDT Freeze Lawsuit
Thai Investors Sue Tether Over Unwarranted Freeze of $42 Million USDT
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Key Points
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One wallet named in the case, address 0xf3bF…A3eB, held roughly $26.1 million in USDT and had already been mapped as a consolidation point before the government paperwork existed, with the court paper arriving after Tether’s blacklisting action.
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The Raleigh, North Carolina Homeland Security Investigations (HSI) office reportedly opened the case based on a victim tip describing a romance-and-investment scam run through a fake trading platform.
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The lawsuit was filed in the U.S. District Court for the Southern District of New York on August 31, 2026, by Nutthawat Rukthammachalern and Natthawat Kasamvilas.
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Ariel Givner, the plaintiffs’ attorney, posted on X that the complaint contends Tether locked secondary-market holders first, kept earning Treasury yield on reserves, and that a later warrant does not authorize freezing, burning, or reissuing the tokens.
Two Thai businessmen sued Tether in federal court on August 31, 2026, claiming the stablecoin issuer illegally froze $42.4 million in USDT without a court warrant. Bloomingbit reported that Tether blacklisted ten Ethereum addresses in October 2025 after an informal request from a Homeland Security Investigations agent — three months before a judge issued a seizure warrant in February 2026. The plaintiffs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, say they never violated any laws and that Tether had no right to lock their funds.
The lawsuit challenges whether private companies can freeze crypto on government requests without court orders, and whether Tether profited by holding the frozen funds and earning investment returns. The Defiant noted the case raises broader questions about stablecoin issuer authority during law enforcement investigations into fraud schemes. The plaintiffs seek to unfreeze their money, get damages, and recover profits Tether earned while holding their funds.
How Tether Froze the Money Before Getting a Warrant
On October 30, 2025, Tether blacklisted ten Ethereum addresses holding $42,417,785.62 USDT in just 2.5 minutes — all without a court order. Daily Hodl reported that a Homeland Security Investigations agent from the Raleigh, North Carolina office sent an informal request, and Tether acted immediately. One wallet held $26.1 million and had already been identified by investigators as a consolidation point for stolen funds from a romance-and-investment scam.
The two Thai businessmen discovered the freeze on November 2, 2025, when they tried to move their money. When they contacted Tether, the company directed them to an HSI agent's email address instead of providing a court order or legal explanation. CoinCodeCap explained the funds came from secondary-market purchases — the plaintiffs never opened Tether accounts and had no connection to the underlying fraud.
A Seizure Warrant Arrived 112 Days Later
Three and a half months after the freeze, a federal magistrate judge in North Carolina issued Seizure Warrant No. 5:26-MJ-1267-JG on February 19, 2026. The warrant directed Tether to burn the frozen USDT and reissue the tokens to a government-controlled wallet. The Defiant reported that prosecutors announced a $61 million total USDT seizure linked to the pig-butchering scam and publicly thanked Tether for completing the transfer.
The plaintiffs' lawyers argue the warrant came too late to fix Tether's illegal October freeze. Bloomingbit noted the complaint contends that a warrant issued later cannot retroactively authorize a company to permanently burn and remake tokens from private wallets without proper legal process. The question becomes: Did Tether act lawfully on an informal request, or did it violate the Fifth Amendment by seizing property without due process?
Tether Says It Works With Law Enforcement
Tether has rejected the lawsuit as baseless, stating it cooperates with the Justice Department and law enforcement worldwide to prevent illegal use of USDT. The company argues that freezing suspected proceeds quickly stops criminals from moving stolen money before courts can act. IcoBench reported that former Ripple CTO David Schwartz publicly defended Tether on social media, arguing fast freezes prevent double liability and money fleeing across borders.
But critics worry that Tether's power to freeze assets from secondary buyers sets a dangerous precedent. Over 112 days, Tether earned investment returns on the $42.4 million in frozen reserves while holding the plaintiffs' money. If the court sides with Tether, any secondary buyer could lose crypto to unofficial government requests — without a warrant and without court notice.
A Landmark Decision on Stablecoin Power
This case could reshape how stablecoin issuers operate during law enforcement investigations. If the plaintiffs win, Tether and other issuers may be forced to wait for court orders before freezing secondary-market holdings. If Tether wins, it solidifies stablecoin companies' authority to act as private gatekeepers for law enforcement — even without formal judicial warrants.
The lawsuit sits in U.S. District Court for the Southern District of New York under Judge Lewis J. Liman. It names four Tether entities as defendants and alleges conversion, trespass to chattels, and unjust enrichment. The outcome will likely influence how stablecoin issuers balance cooperation with law enforcement against the property rights of legitimate secondary-market buyers.
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