Tether Sued Over Alleged $42M USDT Freeze Without Court Order
Two Thai nationals have filed a lawsuit against Tether in New York's U.S. District Court for the Southern District, alleging that the stablecoin issuer froze $42.4 million in USDT without any legal authorization.
The plaintiffs, Nutthawat Rukthammachalern and Natthawat Kasamvilas, claim that Tether blacklisted ten Ethereum addresses on October 30, 2025, after receiving an informal request from a Homeland Security Investigations agent. No warrant, court order, or formal legal process was in place at the time of the freeze.
The plaintiffs argue that they had no direct customer relationship with Tether and bought the tokens on the secondary market, which means that Tether controlling the smart contract does not give it legal authority over tokens held by third parties. They are seeking damages, an injunction, and disgorgement of income Tether earned on reserves backing the frozen tokens.
Tether used its Ethereum smart contract to block the addresses and can burn blacklisted USDT using a function called destroyBlackFunds. The plaintiffs say that their specific 42.4 million USDT remained frozen and had not yet been transferred to the government wallet as of when the complaint was filed.