Tether Faces Lawsuit Over $42M USDT Freeze and Authority to Blacklist Wallets

Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have filed a lawsuit against Tether, challenging the company's authority to freeze and reissue USDT. The plaintiffs claim that Tether blacklisted their Ethereum wallets without a court warrant, freezing $42.4 million in USDT.

The lawsuit argues that the October 2025 blacklist was an informal request from a Homeland Security Investigations agent, which Tether followed before any formal court order was issued. The businessmen say they received no notice and lost access to their funds.

A federal court in North Carolina later issued a seizure warrant on February 19, 2026, directing Tether to burn the frozen USDT and reissue equivalent tokens. However, the plaintiffs argue that this warrant does not retroactively authorize the October blacklist or empower Tether to burn and reissue their stablecoin holdings.

The lawsuit seeks an order requiring Tether to unfreeze the wallets, remove the blacklist, and refund the alleged income earned from reserves backing the frozen USDT.