Tether Sued After Freezing $42.4 Million in USDT

Tether is facing a lawsuit in New York after freezing $42.4 million in USDT held by two Thai businessmen. The plaintiffs claim the company blacklisted their Ethereum addresses without a warrant or prior notice in October 2025. They argue that Tether lacked the authority to take this action simply because of an informal request from federal agents.

The frozen assets are linked to an investigation by the Department of Homeland Security into pig butchering scams. Authorities tracked the funds through several wallets as part of a money laundering operation. A formal warrant was eventually issued in February 2026, which directed Tether to burn the frozen tokens and transfer them to a government wallet. The government successfully seized $61 million in total during the operation.

While the plaintiffs do not explicitly challenge the link to criminal activity, they are suing over the process used to seize their assets. They claim that Tether benefits financially by holding the cash reserves that back the USDT and are seeking damages for the freeze. They are asking the court to lift the freeze and provide compensation for interest earned on those reserves.

Tether has dismissed the legal challenge as entirely without merit. The company maintains that it works closely with global law enforcement to stop the illegal use of its stablecoin. The outcome of this case could set a significant precedent for how stablecoin issuers handle law enforcement requests and user property rights moving forward.