Tether sued over $42.4 million USDT freeze allegedly made months before US warrant

Sep 2, 2026

Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas have sued stablecoin issuer Tether in New York, alleging the company unlawfully froze $42.4 million in USDT on October 30, 2025, at the informal request of a federal agent. A formal U.S. seizure warrant was not issued until February 19, 2026, as part of a $61 million pig-butchering fraud investigation. The plaintiffs, who deny any wrongdoing, seek to block Tether from burning the tokens and demand the disgorgement of interest yield earned on the backing reserves.

USDT freeze before warrant

▪Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York on August 31, 2026
▪The lawsuit alleges Tether blacklisted 10 Ethereum addresses holding 42,417,785.62 USDT on October 30, 2025, following an informal request from a Homeland Security Investigations agent
▪The February 2026 seizure warrant directed Tether to burn the frozen USDT tokens, mint replacement tokens, and transfer them to a government-controlled wallet
▪A federal magistrate judge in the Eastern District of North Carolina issued a seizure warrant for the frozen USDT on February 19, 2026, nearly four months after Tether blacklisted the addresses

Tether blacklist authority dispute

▪Tether stated that the lawsuit is a baseless attempt to interfere with its cooperation with global law enforcement agencies to prevent the unlawful use of USDT
▪Nutthawat Rukthammachalern and Natthawat Kasamvilas argue they acquired the USDT through secondary-market transactions, never opened a Tether account, and never agreed to Tether's terms of service
▪Tether controls administrative functions in the USDT smart contract that allow the company to blacklist cryptocurrency addresses and burn tokens on networks like Ethereum

Plaintiff damages claims

▪The lawsuit asserts five legal claims against Tether, including conversion, trespass to chattels, and unjust enrichment, and seeks punitive damages
▪The plaintiffs seek a court order to restore the transferability of their USDT, remove their addresses from Tether's blacklist, and block Tether from burning the tokens

Treasury reserve yield issue

▪The plaintiffs seek the disgorgement of interest or yield that Tether earned on the reserves backing the frozen USDT tokens while they were blacklisted
▪The lawsuit states that Tether holds approximately $130 billion in Treasury securities through Cantor Fitzgerald and continues to collect interest yield while frozen tokens cannot be redeemed

Pig butchering scam investigation

▪The disputed USDT is tied to a broader U.S. Justice Department investigation involving $61 million in USDT traced to romance investment fraud, also known as pig-butchering scams
▪Attorneys for Nutthawat Rukthammachalern and Natthawat Kasamvilas state their clients acquired the USDT legitimately and are actively contesting the government's forfeiture position in North Carolina

Perspective of Thai Businessmen (Plaintiffs)

▪The lawsuit asserts five legal claims against Tether, including conversion, trespass to chattels, and unjust enrichment, and seeks punitive damages
▪The lawsuit alleges Tether blacklisted 10 Ethereum addresses holding 42,417,785.62 USDT on October 30, 2025, following an informal request from a Homeland Security Investigations agent
▪Attorneys for Nutthawat Rukthammachalern and Natthawat Kasamvilas state their clients acquired the USDT legitimately and are actively contesting the government's forfeiture position in North Carolina
▪Nutthawat Rukthammachalern and Natthawat Kasamvilas argue they acquired the USDT through secondary-market transactions, never opened a Tether account, and never agreed to Tether's terms of service

Perspective of Tether (Defendant)

▪Tether stated that the lawsuit is a baseless attempt to interfere with its cooperation with global law enforcement agencies to prevent the unlawful use of USDT
▪Tether controls administrative functions in the USDT smart contract that allow the company to blacklist cryptocurrency addresses and burn tokens on networks like Ethereum