Legal Action Against Tether
A group of plaintiffs, claiming unpaid terrorism judgments against Iran, has approached a federal court in Manhattan with a request for Tether to surrender a substantial amount of cryptocurrency—specifically, 344,149,759 USDT. This sum is currently held in two Tron wallets that have been identified as associated with Iran’s Islamic Revolutionary Guard Corps (IRGC).
Plaintiffs’ Proposal
The victims, seeking to enforce legal judgments linked to attacks connected to Iran-backed factions, have proposed that Tether should reduce the balances in these blocked accounts to zero and then create an equivalent amount of USDT to be transferred to a designated wallet provided by their attorneys.
Legal Arguments
In their legal filing, the plaintiffs argue that Tether possesses the necessary technical capabilities to facilitate this action, citing previous instances where the company has frozen and reissued USDT in compliance with law enforcement directives. The motion states:
“Tether is required to turn over any property of a judgment debtor that it is capable of turning over,”
emphasizing the unique operational characteristics of USDT compared to other cryptocurrencies like Bitcoin or Ether, due to its issuer-level controls that allow Tether to block accounts and prevent transactions.
Background on Wallets and Sanctions
These specific wallets were frozen following sanctions imposed by the Office of Foreign Assets Control (OFAC) on April 24, which identified those addresses as being associated with Iranian entities. Reports indicate that Tether acted swiftly, freezing approximately $344 million in USDT relating to these identified wallets. TRM Labs has tracked the wallets, revealing they processed around $370 million in nearly 1,000 transactions since March 2021, with the majority of those funds remaining untouched since late 2023, indicating they were more likely held in reserve rather than actively utilized.
Tether’s Regulatory Involvement
As Tether’s regulatory involvement expands, various sources, including Crypto.news, have noted that their Financial Crime Unit has been responsible for freezing more than $450 million in assets suspected of being tied to illicit activities since its inception in 2024. Recent updates highlighted Tether’s freezing of an additional $514 million across 370 addresses in just the last month. Cumulatively, Tether’s blacklist for 2025 is reported to account for a staggering total of $1.26 billion across Ethereum and Tron networks.
Conclusion
However, it should be noted that the motion does not guarantee that the plaintiffs will receive these funds immediately; a court ruling is still necessary to establish whether Tether can be legally compelled to transfer the frozen USDT under both New York turnover laws and federal regulations concerning terrorism enforcement.
