Two Thai businessmen have filed a lawsuit against Tether, claiming the company unlawfully froze approximately $42.4 million worth of its USDT stablecoin. The complaint, filed on Aug. 31 in the S. District Court for the Southern District of New York, alleges that Tether blacklisted ten Ethereum addresses containing 42,417,785.62 USDT on Oct. 30, 2025, following an informal request from a Homeland Security Investigations (HSI) agent, without a warrant or court order.
Nutthawat Rukthammachalern and Natthawat Kasamvilas, the plaintiffs, claim they acquired the tokens through secondary-market business transactions and had no direct customer relationship with Tether. According to the complaint, Kasamvilas discovered the restriction after attempting a transaction and was referred to an HSI agent's email address without an explanation for the freeze. The lawsuit names four Tether entities and is ongoing in the Southern District of New York.
Legal challenge
The plaintiffs argue that Tether's actions exceeded its authority. They point out that Tether's administrative control over the USDT smart contract, which allows it to blacklist addresses and burn tokens, does not confer legal authority over tokens held by third parties. The complaint uses terms like 'addBlackList' and 'destroyBlackFunds' to describe functions that Tether can execute, functions the plaintiffs contend were misused in this case.
On Feb. 19, 2026, a magistrate judge in the Eastern District of North Carolina issued a seizure warrant (5:26-MJ-1267-JG) that outlined a plan for Tether to burn the restricted tokens, mint replacement USDT, and transfer it to a government-controlled wallet. This happened after federal prosecutors announced the seizure of more than $61 million in USDT, following their allegations that the wallets were involved in cryptocurrency investment scams known as 'pig-butchering' schemes.
However, the plaintiffs argue that the warrant, issued months after the initial freeze, cannot retroactively validate Tether's October action. 'The warrant neither retroactively authorized the freeze nor permitted Tether to destroy the original tokens before a final forfeiture judgment,' according to the complaint.
Tether's position
Tether, which has not yet filed a public response in court as of Sept. 2, has previously highlighted its cooperation with law enforcement. In April, the company said it works with more than 340 law-enforcement agencies across 65 countries, and that such cooperation had helped freeze over $4.4 billion in assets linked to suspected unlawful activity.
Tether CEO Paolo Ardoino has been vocal about the company's role. 'USDT is not a safe haven for illicit activity,' he said in a statement. 'When credible links to sanctioned entities or criminal networks are identified, we act immediately and decisively.'
The Justice Department thanked Tether for assisting with the asset transfer related to the North Carolina warrant.
The plaintiffs are seeking conversion, trespass to chattels, unjust enrichment, and declaratory and injunctive relief. They have also filed an application in North Carolina on July 31 seeking the return of the USDT. Legal representation for the plaintiffs did not immediately respond to requests for comment from Decrypt.