Tether Sued Over $42.4 Million USDT Freeze Before Court Warrant

Tether, the stablecoin issuer, has been sued in US court over the freezing of about $42.4 million of USDT. At the center of the case is whether Tether could freeze the assets based solely on a request from investigators before a court issued a seizure warrant.

Cointelegraph reported on Sept. 3 that two Thai businessmen filed the lawsuit against Tether in the US District Court for the Southern District of New York.

The plaintiffs allege that Tether froze $42.4 million worth of USDT in October 2025 without a warrant, based on an informal request from US Homeland Security Investigations. The funds were reportedly linked to a so-called pig-butchering investment scam involving a total of $61 million.

The key issue is that the court warrant came later. The US District Court for the Eastern District of North Carolina issued a seizure warrant for the funds in February 2026. The warrant included a plan to burn the related tokens and reissue them to a government wallet.

The plaintiffs do not fully deny that the funds were tied to the fraud case. Instead, they are disputing whether the freeze carried out before the court warrant was lawful.

The lawsuit could force a court to decide how far a stablecoin issuer may go in restricting transfers of user assets based only on requests from law enforcement. It also puts a spotlight on the boundary between the freeze powers of centralized stablecoin issuers and due process.