Tether Defends $42M USDT Freeze Amid Thai Investors' Lawsuit
Tether's stablecoin issuer has been facing a major lawsuit in New York's Southern District Court. The plaintiffs, a group of Thai investors, claim they purchased 42,417,785.62 USDT on the secondary market and demand its return.
The funds were initially frozen by Tether after receiving an informal warning from Homeland Security Investigations (HSI) in October 2025.
David Schwartz, Ripple's CTO and XRP Ledger architect, defended Tether's actions, stating that they acted under the legal doctrine protecting against double liability when conflicting claims exist over the same asset.
The court order formalizing the freeze was issued nearly four months later on February 19, 2026. The plaintiffs are seeking not only the return of their capital but also financial compensation for the yield Tether generated on the backing reserves during the forced custody period.