Starting Monday, two Thai businessmen sued Tether, claiming that the stablecoin issuer froze approximately $42.4 million worth of USDT without legal authorization.
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed their complaint in the U.S. District Court for the Southern District of New York. The lawsuit lists four Tether entities and involves USDT held across ten Ethereum addresses.
According to the complaint, last October, Tether blacklisted these addresses based on an informal request by a Homeland Security Investigations agent, without obtaining a warrant or court order. Three months later, a federal district judge in North Carolina issued a seizure order, outlining a plan for Tether to destroy the restricted tokens, mint replacement USDT, and transfer them to a government-controlled wallet.
The plaintiffs argue that this seizure order did not retroactively authorize the freeze, nor did it permit Tether to destroy the original tokens before a final forfeiture judgment.
Lawyers for Rukthammachalern and Kasamvilas did not immediately respond to Decrypt’s request for comment.
Tether controls administrative functions within the USDT smart contract, allowing the company to blacklist cryptocurrency addresses across multiple networks, including Ethereum. Blacklisted tokens remain visible on the blockchain but cannot be transferred. Tether can also destroy USDT held at these addresses.
In April, Tether stated it was working with over 340 law enforcement agencies from 65 countries. Tether claims that this cooperation has helped freeze more than $4.4 billion in assets connected to suspected illegal activities.
“USDT is not a haven for illegal activity,” Tether CEO Paolo Ardoino said in a statement at the time. “When credible connections to sanctioned entities or criminal networks are identified, we act swiftly and decisively. Recent events show that when platforms fail to act quickly, law enforcement breaks down and users are exposed, trust is eroded.”
Rukthammachalern and Kasamvilas say they acquired USDT through commercial transactions on the secondary market, never opened a Tether account, did not purchase tokens directly from the company, or agree to its terms.
Tether did not immediately respond to Decrypt’s request for comment.
