Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint in the US District Court for the Southern District of New York on August 31, challenging Tether’s decision to blacklist 10 Ethereum addresses containing 42,417,785.62 USDT.
The plaintiffs allege Tether acted on October 30, 2025 after an informal request from a Homeland Security Investigations agent, although no warrant, subpoena, court order or other formal legal process had then been directed to the company. Their allegations have not been adjudicated.
A magistrate judge in the Eastern District of North Carolina later issued a seizure warrant on February 19, 2026, nearly four months after the addresses were blacklisted. The warrant, cited in the lawsuit as No. 5:26-MJ-1267-JG, authorised action against cryptocurrency connected to an investigation into proceeds allegedly derived from online investment fraud.
Five days later, the US Attorney’s Office for the Eastern District of North Carolina announced the seizure of more than $61 million worth of Tether. Federal investigators said the cryptocurrency had been traced to addresses allegedly associated with laundering proceeds stolen from victims of cryptocurrency investment scams, sometimes described as pig-butchering schemes.
The Justice Department said investigators received a fraud report through the HSI tip line and traced a victim’s money through multiple cryptocurrency wallets. Several wallets still held sums considered subject to seizure and forfeiture, it said. The department publicly acknowledged Tether’s assistance in transferring the assets.
The two businessmen contend that Tether lacked legal authority to immobilise their combined holdings before formal judicial process was obtained. They also argue that they bought the USDT on the secondary market and had no contractual relationship with Tether, a point they say is relevant to whether the company could rely on its terms of service against them.
Tether’s terms state that it may freeze tokens as required by applicable law or where, in its sole discretion, it determines that doing so is prudent. The terms also permit blacklisting of digital-token addresses and freezing or confiscating assets where Tether determines or suspects prohibited use.
The lawsuit therefore places the timing and legal basis of the October 2025 freeze at the centre of the dispute. The court has not ruled on whether Tether’s actions were lawful, whether the plaintiffs have valid ownership claims to the disputed tokens, or whether the assets were properly subject to seizure.
According to the complaint, Kasamvilas discovered the restriction when he tried to make a transaction. After contacting Tether, he was allegedly referred to an HSI special agent rather than given a court order or other legal instrument supporting the freeze.
The plaintiffs are seeking relief that includes restoration of access to the disputed assets, damages and recovery of income they say Tether earned from reserves backing the frozen USDT. They also seek disgorgement of interest, yield and other benefits allegedly attributable to those reserves during the period in which the tokens were immobilised.
Their filing names Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants. Publicly available accounts of the case said Tether had not issued a substantive response to the allegations by the time the lawsuit became public this week.
USDT is designed to maintain a value of about one US dollar, making the disputed balance approximately equivalent to $42.4 million. Unlike decentralised cryptocurrencies whose issuers cannot directly block particular addresses, Tether retains technical controls that allow specified USDT addresses to be blacklisted.
Such controls have become an important feature of law-enforcement efforts involving stablecoins. US authorities have repeatedly used civil and criminal forfeiture procedures to recover USDT linked to fraud and money laundering, while allowing third parties to assert ownership claims during judicial proceedings.
Arabian Post – Crypto News Network
Follow Arabian Post
Select Arabian Post as your preferred source on Google and MSN News for trusted business news and Arab politics and updates.
