The Tether USDT lawsuit has become a matter in the state of New York due to accusations by two Thai businessmen against Tether, the owner of USDT, which allegedly froze $42.4 million worth of stablecoin without any legal authority.
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Nutthawat Rukthammachalern and Natthawat Kasamvilas have filed the lawsuit in the Southern District Court of the United States of New York. The brothers want to determine whether Tether has the right to freeze, burn, or reissue USDT following an unofficial request from U.S. law enforcement agencies.
Why Did Tether Freeze $42.4M USDT?
According to lawyer Ariel Givner, the two brothers argue that the company Tether has blacklisted ten Ethereum wallets, which have an exact amount of 42,417,785.62 USDT, on October 30, 2025.
The claimants argue that the action taken by Tether followed an unofficial request made by Homeland Security Investigations (HSI). The restriction was conducted without any warrant, subpoena, court order, or notice whatsoever.
According to Kasamvilas, he discovered the restriction when trying to transfer the coins, and when he contacted Tether, he was given an HSI email account concerning the restriction.
This case relates to an investigation by North Carolina of an alleged “pig butchering” scam following a report by a victim alleging a romance and investment scam.
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Tether USDT Lawsuit Questions Later Seizure Warrant
Seizure warrants were served in North Carolina on February 19, 2026, several months after the freezing of the wallets.
Tether was ordered to destroy frozen USDT tokens and then issue the same amount of tokens to a government-controlled wallet. The authorities seized more than $61 million of USDT, which was associated with pig-butchering scams, five days later and thanked Tether for help with executing this order.
But the brothers claim that the second warrant cannot render the October freeze legal.
The brothers also challenge the legality of giving the warrant to Tether, a private entity, to destroy USDT and to issue new tokens to a government wallet.
Plaintiffs Challenge Tether’s Control Over USDT
In the Tether USDT lawsuit, the plaintiffs are not requesting the courts to order a stop to the government’s broader investigation on fraud charges. The two parties are contesting the way in which Tether managed its wallets and the money.
Plaintiffs claim that they obtained the USDT tokens from commercial transactions rather than being Tether’s clients.
They admit that Tether could blacklist wallet addresses, but this does not mean that Tether had the authority to confiscate the tokens belonging to someone else.
The plaintiffs seek an order from the court restraining Tether from destroying the disputed USDTs and taking down the blacklist from their wallets. Furthermore, they would like compensation if any destruction is made.
They also seek the recovery of income earned from the reserve funds that are said to back up their USDTs.
What Happens Next in the Tether USDT Lawsuit?
The Tether USDT Lawsuit is still at a preliminary stage, and there have been no court findings in favor of the claims raised by the plaintiffs.
The defendants’ counterclaims may turn out to be significant at this point. In addition, an injunction may be considered in the event that the plaintiffs request an interim order against the burning or issuance of the USDT in question.
There may be other potential implications of this lawsuit on the stablecoin industry as well.
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