Tether, the issuer of the USDT stablecoin, is facing legal action in New York after two Thai businessmen accused the company of freezing $42.4 million worth of USDT without a court order or legal authority.
Allegations of Unauthorized Wallet Freeze
Nutthawat Rukthammachalern and Natthawat Kasamvilas, two brothers from Thailand, have filed the lawsuit in the Southern District of New York. They claim Tether blacklisted ten Ethereum wallets containing over 42.4 million USDT on October 30, 2025, following an informal request from a Homeland Security Investigations (HSI) agent rather than through any formal legal process.
According to attorney Ariel Givner, the brothers’ wallets were frozen without any accompanying warrant, subpoena, court order, or notice. The businessmen stated they became aware of the restriction while attempting to transfer their digital assets. Upon reaching out to Tether for clarification, they were referred to an HSI contact email concerning the freeze.
Kasamvilas described discovering the wallet freeze during a failed transfer attempt and reported that Tether directed him to communicate with an HSI email address for further information.
This dispute arises amid a North Carolina investigation into a suspected “pig butchering” scam, a type of fraudulent scheme that typically combines romance and investment fraud.
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AAPLMini dictionary: Pig butchering scam, an elaborate fraudulent scheme in which scammers build trust with victims over a period via social interactions, then lure them into investment schemes and eventually steal their funds, often using cryptocurrency transfers.
Legal Questions Surrounding the USDT Seizure
Although authorities later issued seizure warrants in North Carolina on February 19, 2026—months after the original freeze—Rukthammachalern and Kasamvilas have argued that this does not legitimize the earlier restriction. Subsequent to the warrant, Tether was reportedly instructed to destroy the frozen tokens and reissue them in an account controlled by government officials.
Law enforcement seized more than $61 million in USDT linked to pig-butchering scams five days after the warrants, crediting Tether with assisting in the asset recovery process.
| Event Date | Frozen Amount (USDT) | Legal Authority |
|---|---|---|
| Oct 30, 2025 | 42,417,785.62 | Unofficial HSI request |
| Feb 19, 2026 | 61,000,000+ | Formal seizure warrant |
The brothers dispute that the warrant issued in February can retroactively make the October freeze lawful. They also question the legality of instructing a private company like Tether to burn USDT and issue new tokens to a government wallet.
Plaintiffs Seek Compensation and Lifting of Restrictions
Rukthammachalern and Kasamvilas clarified that they acquired their USDT through commercial operations, not as direct customers of Tether. They acknowledged Tether’s technical ability to blacklist wallet addresses but argue this action does not grant the company the right to confiscate or reassign ownership of user tokens.
They are asking the court to order Tether not to destroy the disputed USDT and to remove the blacklist on their wallets. The plaintiffs are also demanding compensation if any of the tokens are destroyed as directed.
The plaintiffs are seeking the preservation of their assets, compensation for any losses resulting from destruction of tokens, and a share of the reserve income that is purported to back their USDT.
At this stage, the lawsuit remains in a preliminary phase, and the court has not yet ruled in favor of either side’s claims. The defendants’ counterarguments may carry significant weight as the proceedings develop. There is also a possibility that the court will consider an interim injunction to prevent any immediate action with the frozen tokens until a final decision is made.
Observers note that the outcome could have broader implications for the stablecoin sector, depending on how the court interprets the rights and limitations of token issuers in relation to law enforcement requests and asset control.
