Two Thai Businessmen Sue Tether Over $42.4M USDT Freeze
Quick Look
Two Thai businessmen filed a lawsuit in New York federal court alleging Tether froze $42.4 million in USDT without legal authority, claiming the action followed an informal request from a Homeland Security agent and preceded a later seizure warrant that did not retroactively authorize the freeze or token destruction.
AI-generated summary
Why It Matters
Tether maintains administrative control over USDT's smart contract, allowing it to blacklist addresses and burn tokens. The company states it works with over 340 law-enforcement agencies across 65 countries and has frozen more than $4.4 billion in assets linked to suspected unlawful activity.
Two Thai businessmen sued Tether on Monday, claiming the stablecoin issuer froze roughly $42.4 million worth of USDT without legal authority.
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint in the U.S. District Court for the Southern District of New York. It names four Tether entities and concerns USDT held across ten Ethereum addresses.
According to the complaint, Tether blacklisted the addresses last October at the informal request of a Homeland Security Investigations agent, without a warrant or court order. More than three months later, a federal magistrate judge in North Carolina issued a seizure warrant outlining a plan for Tether to burn the restricted tokens, mint replacement USDT, and transfer it to a government-controlled wallet.
The plaintiffs argue that the warrant neither retroactively authorized the freeze nor permitted Tether to destroy the original tokens before a final forfeiture judgment.
Attorneys for Rukthammachalern and Kasamvilas did not immediately respond to a request for comment by Decrypt.
Tether controls administrative functions in USDT’s smart contract that allow the company to blacklist cryptocurrency addresses on various networks, including Ethereum. Blacklisted tokens remain visible on the blockchain but cannot be transferred. Tether can also burn USDT held at those addresses.
In April, Tether said that it works with more than 340 law-enforcement agencies across 65 countries. Tether said that cooperation had helped freeze more than $4.4 billion in assets connected to suspected unlawful activity.
“USDT is not a safe haven for illicit activity,” said Tether CEO Paolo Ardoino in a statement at the time. “When credible links to sanctioned entities or criminal networks are identified, we act immediately and decisively. Recent events have shown what happens when platforms fail to move quickly, enforcement breaks down, users are exposed, and trust erodes.”
Rukthammachalern and Kasamvilas said they acquired the USDT in secondary-market business transactions and never opened Tether accounts, bought tokens directly from the company, or agreed to its terms.
What to Watch
AI outlook — possibilities, not facts
The court will rule on whether the seizure warrant retroactively authorizes Tether's prior freeze and burn of USDT tokens.
Very likely · Within weeks
Open Questions
- What specific evidence did Homeland Security provide to justify the informal request?
- Did Tether consult legal counsel before acting on the HSI agent's request?
- How will the court determine whether the North Carolina warrant retroactively authorizes prior actions?
