Tether Sued Over Alleged Unlawful Freeze of $42 Million in USDT

Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have sued Tether in New York federal court over the alleged unlawful freeze of $42.4 million worth of USDT.

The complaint, filed on Monday, claims that Tether blacklisted ten Ethereum addresses at the informal request of a Homeland Security Investigations agent in October without a warrant or court order.

More than three months later, a federal magistrate judge in North Carolina issued a seizure warrant outlining a plan for Tether to burn the restricted tokens and mint replacement USDT. However, the plaintiffs argue that this warrant did not retroactively authorize the freeze nor permit Tether to destroy the original tokens before a final forfeiture judgment.

Tether controls administrative functions in USDT's smart contract, allowing it to blacklist cryptocurrency addresses on various networks, including Ethereum. Blacklisted tokens remain visible on the blockchain but cannot be transferred. The company can also burn USDT held at those addresses.