$42M USDT Freeze Sparks Lawsuit Against Tether
Tether is facing a lawsuit over its handling of $42.4 million in USDT stablecoin, which was frozen after an informal request from Homeland Security Investigations (HSI). The freeze occurred on October 30, 2025, but it wasn't until February 19, 2026, that a seizure warrant was issued by the Eastern District of North Carolina.
The plaintiffs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, claim Tether kept earning Treasury yield on its reserves while their tokens stayed frozen. They argue this is unlawful and seek to have the freeze lifted and damages if the tokens are destroyed.
The case stems from a North Carolina pig-butchering scam, where funds were allegedly layered through multiple wallets to obscure their origin. Tether was directed to burn the frozen USDT and reissue equivalent tokens to a government-controlled wallet. The plaintiffs challenge whether Tether had authority to take this action without court authorization.
The lawsuit also questions why Tether froze secondary-market holders before receiving any court order, allowing it to continue earning interest on its reserves.