Tether, the issuer of the USDT stablecoin, is being sued in New York for over $42.4 million in USDT after two Thai businessmen accused the government of freezing their wallets without a warrant or court order.
The case now raises a bigger question, can Tether legally block, burn, or reissue privately held USDT based on an informal government request?
Why Did Tether Freeze $42.4M USDT?
According to attorney Ariel Givner, brothers Nutthawat Rukthammachalern and Natthawat Kasamvilas filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York.
The brothers allege that Tether blacklisted 10 Ethereum addresses holding exactly 42,417,785.62 USDT on October 30, 2025, after receiving an informal request from
They claim there was no warrant, court order, subpoena, or prior notice when the freeze happened.
According to the complaint, Kasamvilas only found out the restriction after trying to move the funds. They was allegedly directed by Tether to an HSI email address when he asked about the freeze.
This case is linked to a North Carolina pig-butchering investigation that began after a victim reported an alleged romance-and-investment scam.
Court Warrant Came Months Later
A seizure warrant was issued on February 19, 2026, by a federal court in North Carolina.
The warrant told Tether to burn the frozen USDT and create the same amount in a government wallet. Five days later, authorities said they had seized more than $61 million in USDT linked to alleged pig-butchering scams. They also thanked Tether for helping with the transfer.
However, the brothers argue that the February warrant cannot make Tether’s October freeze legal after the fact. They also question whether the warrant gave Tether, as a private company, the legal power to burn and reissue the USDT.
What Are the Plaintiffs Asking From Tether?
The plaintiffs are not asking the court to stop the government’s fraud investigation. Their complaint is mainly about how Tether handled their wallets and frozen USDT.
The brothers say they received the USDT through business transactions and were not direct customers of Tether. They say that while Tether can technically blacklist a wallet, but this does not automatically give the company the legal right to take or control tokens owned by someone else.
Meanwhile, the brothers are asking the court to stop Tether from burning the disputed USDT and to unblacklist their wallets. They are also seeking damages if the tokens are destroyed.
In addition, they want Tether to return income they claim the company earned from the reserves backing their frozen USDT.
What Happens Next in the Tether Lawsuit?
The case is still at an early stage, and none of the brothers’ allegations have been proven in court.
The next major step will likely be Tether’s response to the complaint.
The court could also consider an injunction if the plaintiffs seek immediate protection against Tether burning or reissuing the disputed USDT.