Two Thai businessmen have filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York, alleging that the company froze $42.4 million worth of USDT without legal authority.

Nutthawat Rukthammachalern and Natthawat Kasamvilas are seeking to determine whether Tether has the right to freeze, burn, or reissue USDT after what they describe as an unofficial request from U.S. law enforcement.

Tether has just been sued over a $42.4 million USDT freeze by Two Thai businessmen in the SDNY. Nutthawat Rukthammachalern and Natthawat Kasamvilas say Tether blacklisted their wallets on October 30, 2025 (42,417,785.62 USDT) after an informal request from an HSI agent. No… pic.twitter.com/hDDgMZRrIv — Ariel Givner (@GivnerAriel) September 1, 2026

Tether has just been sued over a $42.4 million USDT freeze by Two Thai businessmen in the SDNY. Nutthawat Rukthammachalern and Natthawat Kasamvilas say Tether blacklisted their wallets on October 30, 2025 (42,417,785.62 USDT) after an informal request from an HSI agent. No… pic.twitter.com/hDDgMZRrIv

Why Tether Froze the $42.4 Million in USDT

According to lawyer Ariel Givner, the brothers allege that Tether blacklisted ten Ethereum wallets holding exactly 42,417,785.62 USDT on October 30, 2025.

They say the action followed an informal request from Homeland Security Investigations (HSI) and was carried out without any warrant, subpoena, court order, or notice.

Kasamvilas said he discovered the restriction while trying to transfer the coins. When he contacted Tether, he was given an HSI email account related to the restriction.

The case is tied to a North Carolina investigation into an alleged “pig butchering” scam, following a report from a victim who described a romance and investment fraud. That background matters because stablecoin issuers are increasingly being drawn into fraud recovery efforts, where token controls can affect not just enforcement outcomes but also who can move assets and on what legal basis.

If you’re not familiar with what the pig butchering scam is, here’s your breakdown: — Ariel Givner (@GivnerAriel) September 1, 2026

If you’re not familiar with what the pig butchering scam is, here’s your breakdown:

Tether USDT Lawsuit Challenges Later Seizure Warrant

Seizure warrants were served in North Carolina on February 19, 2026, several months after the wallets were frozen.

Under that order, Tether was instructed to destroy the frozen USDT tokens and issue the same amount to a government-controlled wallet. Five days later, authorities seized more than $61 million in USDT linked to pig-butchering scams and thanked Tether for helping execute the order.

The brothers argue that the later warrant did not make the October freeze lawful.

They also challenge the legality of directing a private company such as Tether to destroy USDT and issue replacement tokens to a government wallet.

Plaintiffs Contest Tether’s Authority Over USDT

The plaintiffs are not asking the court to halt the government’s broader fraud investigation. Instead, they are disputing the manner in which Tether handled the wallets and funds.

They say the USDT came from commercial transactions and that they were not Tether clients.

While they acknowledge that Tether can blacklist wallet addresses, they argue that this does not give the company authority to confiscate tokens that belong to someone else.

The plaintiffs want the court to block Tether from destroying the disputed USDT and to remove the blacklist from their wallets. They also seek compensation if the tokens are destroyed, along with recovery of income allegedly earned from the reserve funds backing the USDT.

What Comes Next

The case remains at an early stage, and there have been no court findings in favor of the plaintiffs’ claims.

Any counterclaims from the defendants could become significant as the case moves forward. The court could also consider an injunction if the plaintiffs seek an interim order to stop the burning or issuance of the disputed USDT.

The lawsuit may also have broader implications for the stablecoin industry, where questions around issuer controls, law-enforcement requests, and wallet blacklisting are likely to remain closely watched as similar cases develop.