Two Thai businessmen have sued Tether over the freezing of approximately $42.4 million in USDT, alleging the world’s largest stablecoin issuer blocked their tokens following an informal request from U.S. investigators before any warrant or court order authorized the action. Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint August 31 in the U.S. District Court for the Southern District of New York.
The lawsuit names four Tether entities and concerns exactly 42,417,785.62 USDT held across 10 Ethereum addresses. According to the complaint, Tether blacklisted those addresses on October 30, 2025 after receiving a request from an agent with Homeland Security Investigations. The businessmen allege that no warrant, subpoena, court order or other formal legal process directed Tether to freeze the assets at the time.
Those claims have not been adjudicated, and Tether had not publicly responded to the lawsuit as of September 2.
Freeze Preceded Government Warrant by More Than Three Months
The timing forms the central issue in the plaintiffs’ case. According to the complaint, Kasamvilas discovered the restriction after attempting to move the USDT. When he contacted Tether, the company allegedly directed him to an HSI special agent rather than explaining its authority for blocking the tokens.
A federal seizure warrant did not arrive until February 19, 2026, more than three months after Tether allegedly imposed the blacklist. The warrant was obtained in the Eastern District of North Carolina as part of a broader investigation into cryptocurrency investment fraud.
According to the New York complaint, it contemplated Tether burning USDT associated with targeted addresses, issuing an equivalent amount of replacement tokens and transferring those tokens into a U.S. government-controlled wallet.
The businessmen argue the later warrant could not retroactively authorize Tether’s October freeze. They also dispute whether a seizure warrant legally permits Tether to destroy the specific frozen tokens and substitute newly minted USDT before a final forfeiture determination. The plaintiffs say they obtained the USDT through secondary-market business transactions and had no direct customer relationship with Tether.
Their claims include conversion, trespass to chattels and unjust enrichment. They seek declaratory and injunctive relief, damages, punitive damages and disgorgement of income Tether allegedly earned from reserves backing the immobilized USDT.
Funds Linked to Broader $61M Fraud Investigation
The disputed assets appear connected to a considerably larger federal investigation. On February 24, the U.S. Attorney’s Office for the Eastern District of North Carolina announced that federal agents had seized more than $61 million in USDT allegedly connected to laundering proceeds from cryptocurrency investment scams.
Prosecutors said HSI investigators began tracing funds after receiving a report from a victim of an investment-fraud scheme. Victims were allegedly directed to fraudulent cryptocurrency platforms displaying fabricated investment returns before their assets were routed through multiple wallets to obscure their source and ownership.
The Justice Department specifically thanked Tether for assisting authorities in transferring the seized assets. That does not establish that the two Thai businessmen committed fraud or that the disputed $42.4 million is ultimately forfeitable. The New York lawsuit concerns Tether’s authority to freeze their USDT and is separate from the government’s underlying allegations about the assets.
The plaintiffs have also sought return of their tokens through proceedings in North Carolina. Importantly, available records indicate their 42.42 million USDT remained blacklisted when the New York complaint was filed. The lawsuit seeks an injunction preventing Tether from burning the tokens, meaning it is premature to state that those particular assets have already been transferred into government custody.
The dispute could nevertheless have broader implications for centralized stablecoins. Unlike Bitcoin, USDT contains issuer-controlled smart-contract functionality allowing Tether to blacklist addresses and prevent tokens from moving. Tether routinely uses those capabilities when cooperating with law-enforcement agencies.
In April, the company said it had worked with more than 340 agencies across 65 countries and described direct coordination with investigators during active cases as a routine part of its compliance operations. The New York case challenges where the legal boundary for that cooperation lies.
The court will ultimately have to consider whether Tether’s technical ability to immobilize secondary-market USDT also provided sufficient legal authority to do so following an informal law-enforcement request — months before a judge issued a seizure warrant.