Tether sued over $42.4 million USDT freeze

Two Thai entrepreneurs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have brought a lawsuit against Tether in the Southern District of New York, challenging the company’s decision to freeze more than $42 million in USDT tokens.

Background of the freeze

According to the complaint, Tether blacklisted ten Ethereum addresses on October 30, 2025, which together held 42,417,785.62 USDT. The plaintiffs say the action followed an informal request from a Homeland Security Investigations (HSI) special agent, but no legal warrant existed at that time.

Legal proceedings

The plaintiffs filed the suit on August 31, 2026, asserting five causes of action, including conversion, trespass to chattels, and unjust enrichment. They argue that they purchased the tokens on the open market, never opened a Tether account, and never agreed to Tether’s terms of service, making the freeze unlawful.

Government seizure warrant

A magistrate judge in the Eastern District of North Carolina issued a seizure warrant (5:26‑MJ‑1267‑JG) on February 19, 2026, directing Tether to burn the frozen tokens and reissue them to a government wallet. The warrant was linked to a $61 million USDT seizure tied to a romance‑investment fraud case.

Relief sought

The complaint seeks restoration of transferability, a prohibition on any token burn, disgorgement of interest earned on the frozen assets, and punitive damages. The filing notes that Tether holds roughly $130 billion in Treasury securities and continues to collect coupon payments on those securities while the frozen tokens remain inaccessible to their owners.

Current status

Tether has not yet responded to the lawsuit, and no judge has issued a ruling on the merits. The case may influence how stablecoin issuers handle law‑enforcement requests and the legal standards for freezing tokens.