Tether Sued Over Alleged Illegal Freeze of $42.4M in Pig Butchering Scam

Two Thai businessmen have filed a lawsuit against Tether in a New York district court over allegations that the stablecoin issuer illegally froze $42.4 million in USDT during an investigation into a pig butchering investment scam.

The plaintiffs claim that in October 2025, Tether froze the funds without a warrant after receiving an informal request from U.S. Homeland Security Investigations. However, authorities later issued a seizure warrant in February 2026, directing the burn and reissuance of the tokens to a government wallet.

The lawsuit tests the scope and limits of stablecoin issuers' freezing powers and raises questions about how far issuers can go based on informal requests before formal legal authorization is issued.

Meanwhile, Thailand's Securities and Exchange Commission (SEC) has implemented Travel Rule regulations that require digital asset operators to collect information about parties involved in crypto transfers. The rules include checks for self-custodial wallets, which often complicate compliance due to private keys being controlled outside an operator's custody model.