Tether faces $42 million lawsuit over USDT freeze without warrant
Two Thai businessmen have sued Tether over the freezing of 42.4 million USDT, alleging that the company blocked the assets more than three months before U.S. authorities obtained a warrant to seize them. The plaintiffs are seeking to have the tokens unfrozen and to prevent their transfer to the government until a final court ruling.
Nuttawat Rukhamchaloen and Nattawat Kasamwilas filed the lawsuit on August 31, 2026, in the U.S. District Court for the Southern District of New York. According to the complaint, Tether blacklisted 10 Ethereum addresses holding 42.4 million USDT on October 30, 2025.
The plaintiffs allege that the stablecoin issuer acted following an informal request from a U.S. law enforcement official. The corresponding seizure warrant, they claim, was not issued until February 19, 2026.
Plaintiffs seek release of 42.4 million USDT
The businessmen say they acquired the USDT through secondary-market transactions and had no direct contractual relationship with Tether. They are seeking to have the associated addresses removed from the company's blacklist.
The plaintiffs also want to prevent Tether from destroying the frozen tokens and issuing replacement USDT to a government-controlled wallet before a final forfeiture ruling is issued.
The lawsuit also seeks damages and any interest or other income Tether may have earned from the reserves backing the frozen USDT. The claims include conversion and unjust enrichment.
The court will therefore have to consider whether Tether was entitled to freeze tokens held in private wallets before authorities obtained a warrant and whether the warrant issued later allows the company to destroy the USDT before a final forfeiture decision.
USDT linked to $61 million fraud investigation
The disputed funds appear to be connected to a broader U.S. Department of Justice investigation involving more than $61 million in USDT. Prosecutors allege the assets were stolen through pig-butchering scams, in which fraudsters build long-term relationships with victims and persuade them to transfer money to fraudulent investment platforms.
The funds were subsequently moved through multiple crypto wallets. The Justice Department previously noted Tether's assistance in transferring the seized assets, while the company described the operation as a recovery of funds carried out with its support.
However, the court has yet to establish either the Thai businessmen's ownership rights to the disputed 42.4 million USDT or the U.S. government's allegations regarding the origin of the funds. The lawsuit effectively raises questions about the limits of a centralized stablecoin issuer's authority when cooperating with law enforcement.
Meanwhile, Thailand is preparing a major overhaul of its financial market laws to speed up fraud investigations and strengthen oversight. The proposed changes would give the country's Securities and Exchange Commission a more direct role in investigating serious financial crimes.
Earlier, we reported that Thailand expanded its derivatives legislation to include Bitcoin and other digital assets. The changes broaden the country's legal framework for regulating cryptocurrency-related financial instruments.
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