Key facts
- Two Thai businessmen have sued Tether in a New York federal court.
- They allege Tether unlawfully froze $42.4 million in USDT.
- The freeze allegedly occurred in October at an informal request from Homeland Security Investigations.
- A seizure warrant was issued months later in February.
- The funds are linked to a $61 million pig butchering scam.
- The plaintiffs are challenging Tether's authority to freeze and control assets.
Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have filed a lawsuit against stablecoin issuer Tether in the U.S. District Court for the Southern District of New York. They allege that Tether unlawfully froze approximately $42.4 million worth of USDT across ten Ethereum addresses in October, acting on an informal request from a Homeland Security Investigations agent without a warrant. The plaintiffs claim they acquired the USDT through secondary-market transactions and never opened accounts directly with Tether or agreed to its terms.
Months later, in February, a federal magistrate judge in North Carolina issued a seizure warrant outlining a plan for Tether to burn the restricted tokens and transfer replacement USDT to a government-controlled wallet. The plaintiffs argue this warrant did not retroactively authorize the initial freeze nor permit Tether to destroy the original tokens before a final forfeiture judgment. They are seeking restoration of access to the funds and damages, including income allegedly earned from the reserves backing the tokens.
Tether, which controls administrative functions in USDT's smart contract allowing it to blacklist addresses and burn tokens, stated that it works with over 340 law enforcement agencies globally and has helped freeze more than $4.4 billion in assets linked to illicit activity. CEO Paolo Ardoino asserted that USDT is not a safe haven for illicit funds and that the company acts decisively when credible links to criminal networks are identified.