Legal Dispute Overview
In a significant legal dispute, two businessmen from Thailand have brought a lawsuit against Tether, alleging improper actions regarding the freezing of their assets. On August 31, the plaintiffs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, filed their complaint in the U.S. District Court for the Southern District of New York. They assert that Tether unjustly blocked access to a total of 42,417,785.62 USDT, which was contained in ten Ethereum wallets, prior to any seizure warrant being issued by authorities.
Background of the Case
The case has its roots in a broader investigation linked to a North Carolina ‘pig-butchering’ fraud scheme, which involves elaborate methods of romance and investment scams that lead victims to lose substantial amounts of money. The investigation reportedly started when Homeland Security Investigations (HSI) in Raleigh received a report from a victim.
Details of the Asset Freeze
Kasamvilas did not realize that the funds were frozen until he attempted to conduct a transaction. Upon inquiry with Tether, the company merely directed him to an email purportedly belonging to an HSI agent, without clarifying the legal basis for the asset freeze. The lawsuit claims that Tether employed a mechanism within its Ethereum blockchain contract to blacklist the affected addresses, effectively preventing any further movement of the USDT. Additionally, Tether possesses the capability to completely remove blacklisted USDT through a function designed to “burn” those tokens.
Claims of the Plaintiffs
Crucially, both plaintiffs contend that their acquisition of the USDT was through legitimate secondary-market transactions and that they had no direct dealings with Tether. They emphasize that Tether’s management of its smart contract does not grant it legal rights over tokens held by independent third parties.
Seizure Warrant and Federal Actions
On February 19, 2026, a magistrate in North Carolina issued a seizure warrant permitting Tether to destroy the USDT in the identified wallets and replace them with newly minted tokens for transfer to a government-controlled account. Five days later, federal authorities announced the seizure of a substantial $61 million in USDT, as part of the wider investigation into fraudulent cryptocurrency schemes. HSI had traced the origins of the funds through numerous wallets that were allegedly used to conceal the money’s true ownership.
Ongoing Legal Challenges
Despite Tether’s cooperation in this effort, the lawsuit indicates that the specific amount of 42.4 million USDT remains under freeze, with the plaintiffs seeking to stop Tether from burning these tokens. They express that the existing records do not confirm that these funds have been transferred to a government wallet.
Beyond challenging the legitimacy of Tether’s actions following the informal request from HSI, the plaintiffs question the legal ability of a private stablecoin operator to seize funds solely based on unverified law enforcement inquiries before obtaining formal judicial consent. Furthermore, they argue that the subsequent February warrant cannot retrospectively justify Tether’s earlier actions in October regarding the freeze of the tokens in question.
Relief Sought
The relief sought in this case covers various claims, including conversion, unjust enrichment, and requests for both declaratory and injunctive relief. The businessmen demand that Tether list the tokens as unblocked and compensate them for any destroyed assets, along with profits that Tether allegedly gained from the reserves tied to the frozen USDT.
Conclusion
Previously reported by crypto news outlets, Tether’s enforcement capabilities are expansive, with the firm having frozen over $514 million across numerous addresses during a single month in 2026 alone. The situation continues to evolve, with Tether expected to respond to the lawsuit, and the court might entertain a request for an immediate injunction to safeguard the assets before further actions are taken.
