Thai Investors Sue Tether over $42m USDT Freeze Without Warrant

Two Thai investors are taking Tether to federal court, alleging the stablecoin issuer froze $42.4 million of their USDT months before any court authorized the action. Nutthawat Rukthammachalern and Natthawat Kasamvilas filed suit on Aug. 31 in the U.S. District Court for the Southern District of New York, arguing that Tether’s unilateral blacklisting of their wallets violated their rights without individualized evidence connecting them to wrongdoing. A Freeze That Arrived Months Before Any Court Warrant The complaint centers on a freeze carried out by Tether on Oct. 30, 2025, when the company blacklisted ten Ethereum addresses holding a combined $42,417,785.62 in USDT. The plaintiffs say the action came without court approval, without notice, and with no direct allegation that the funds were tied to criminal activity. The seizure warrant that eventually surfaced came from a separate case entirely. A magistrate judge in the Eastern District of North Carolina issued warrant No. 5:26-MJ-1267-JG on Feb. 19, 2026, in connection with an investigation into pig-butchering investment scams. That probe alleged the wallets had received proceeds from romance-driven crypto fraud schemes, yet the Thai plaintiffs claim they were unaware of any restriction until long after their assets were locked. They further argue that the North Carolina warrant was part of a broader sweep. Prosecutors say more than $61 million in USDT was linked to wallets associated with investment fraud, but the plaintiffs maintain their ten addresses were caught up in the dragnet with no individualized evidence linking them to the alleged scheme. Case Timeline and Parties in Dispute Role / Filing Date / Docket Key Detail / Relief Requested Tether blacklist on Ethereum addresses Oct. 30, 2025 $42,417,785.62 in USDT frozen across ten wallets North Carolina seizure warrant Feb. 19, 2026 Warrant No. 5:26-MJ-1267-JG tied to pig-butchering fraud probe Plaintiffs’ earlier North Carolina application July 31 Request for return of the frozen funds Federal lawsuit against Tether Filed Aug. 31 Declaratory relief, injunction, damages, disgorgement, punitive damages The New York lawsuit asks the court to force Tether to remove the plaintiffs’ addresses from its blacklist and to bar the company from burning or reissuing the disputed USDT while the case is pending. The investors also want disgorgement of any income Tether earned on the reserves backing the frozen tokens. Tether’s Freezing Power Faces a Direct Legal Challenge This is far from the first large-scale asset freeze carried out by Tether. The company has coordinated with the U.S. Office of Foreign Assets Control and law enforcement agencies on several of the largest freezes in stablecoin history. That record includes a $344 million freeze in April tied to illicit activity, and a stretch in May where Tether blacklisted 371 addresses and froze roughly $515 million in USDT within 30 days. Tether says it has supported thousands of law enforcement cases globally. The company’s ability to act so quickly, however, is built directly into USDT’s smart contract architecture through a centralized administrative key. That key grants Tether the power to blacklist addresses without waiting for court proceedings - exactly the mechanism this new lawsuit challenges. The Legal Claims and the Factual Fight Ahead The complaint seeks declaratory relief, an injunction, damages, disgorgement of any income Tether earned on reserves backing the frozen tokens, and punitive damages. The plaintiffs specifically want Tether barred from burning or reissuing the disputed USDT while litigation continues, and they asked the court to order removal of their addresses from the blacklist. This is not their first attempt at recovering the funds. On July 31, they filed a separate application in North Carolina seeking the return of the money, but neither that proceeding nor the New York suit has yielded a ruling on ownership or Tether’s liability. Pig-butchering scams generally involve fraudsters building weeks or months of fabricated romantic trust before steering victims into bogus crypto investment platforms. Investigators often trace stolen funds across dozens of wallets before deciding which addresses are worth freezing. The central factual question in this case is whether the Thai investors’ wallets genuinely touched scam-related proceeds or simply transacted with addresses that had done so elsewhere in the chain. A prolonged court battle could test how far Tether’s unilateral freeze authority extends under U.S. law, and whether asset holders who claim they were wrongly swept into a fraud investigation have a path to recover funds from the stablecoin issuer directly. What Happened with Tether in the Thai Investors’ Lawsuit? Two Thai investors say Tether froze $42,417,785.62 in USDT held across ten Ethereum addresses on Oct. 30, 2025, before any court warrant existed. They filed suit in New York on Aug. 31 seeking to have their addresses removed from Tether’s blacklist and to recover damages from the company. Why Are the Thai Investors Suing Tether in New York? They argue that Tether’s blacklisting was not supported by an individualized court order and did not come until months later, when a North Carolina magistrate judge issued a seizure warrant in an unrelated pig-butchering investigation. The lawsuit claims the freeze exceeded Tether’s legal authority and asks the court to award damages, disgorgement, and punitive relief. What Is a Pig-butchering Crypto Scam? It is a type of fraud in which criminals build fake romantic relationships over weeks or months before persuading victims to deposit money into bogus crypto investment platforms. In this case, U.S. investigators linked certain wallets to such schemes, but the Thai plaintiffs say their addresses were swept into the investigation without direct evidence. Can Tether Legally Freeze USDT Wallets Unilaterally? Tether holds a centralized administrative key in USDT’s smart contract that allows it to blacklist addresses directly. The company says it routinely supports law enforcement, but this lawsuit challenges whether that power can be used before a warrant is issued and without individualized evidence. What Damages Are the Thai Plaintiffs Seeking? They are seeking declaratory relief, an injunction to stop Tether from burning or reissuing the disputed USDT, disgorgement of any income Tether earned on reserves backing the frozen tokens, and punitive damages. They also want the court to force Tether to remove their addresses from its blacklist.