Tether Faces Lawsuit Over Alleged Unauthorized Blacklisting
Tether, the largest stablecoin issuer, has found itself in the midst of a legal battle over its compliance practices. Two plaintiffs filed a complaint in the U.S. District Court for the Southern District of New York accusing Tether of blacklisting their Ethereum addresses without proper legal authority.
The case centers around a 112-day gap between when Tether froze $42 million in USDT and when a federal magistrate judge signed a warrant connected to a broader pig-butchering fraud seizure. The plaintiffs claim they were never involved in the alleged fraud and did not consent to letting Tether block their holdings at a government agent's verbal request.
Tether responded immediately, stating that the lawsuit is 'a baseless attempt to interfere with Tether's important work with global law enforcement.' However, the company's compliance operation has been scrutinized, with some questioning whether its actions constitute a neutral freeze or a transfer of funds.