Tether Faces Lawsuit Over Alleged Freeze of $42M in USDT

On August 31, 2026, two Thai businessmen filed a lawsuit against Tether in the US District Court for the Southern District of New York. They claimed that Tether had frozen approximately 42.4 million USDT across ten Ethereum addresses on October 30, 2025, and that this action was at the informal request of an investigator.

The court order to seize these funds was allegedly issued on February 19, 2026, more than four months after the freeze. Tether has denied the allegations as baseless.

We analyzed the USDT contract's event logs on Ethereum and found that between August 20 and September 3, 2026, 32 addresses were frozen, one address was unfrozen, and two addresses were emptied by burning the tokens.

The freeze function is a deliberate property of the design, allowing Tether to comply with seizure orders. A freeze enters an address into the contract's blocklist, blocking outgoing transfers but leaving the holding on the address visible to the public.