Two Thai businessmen have filed suit against Tether over the freezing of 42.4 million USDT, alleging the stablecoin issuer blacklisted their Ethereum addresses after an informal U.S. law-enforcement request — months before a court authorized any seizure. The case puts an unusual spotlight on a structural feature of centralized stablecoins that most holders rarely confront: the issuer's ability to unilaterally immobilize tokens on any address it controls.

Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the federal complaint on August 31 in the U.S. District Court for the Southern District of New York. The suit names Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants.

Tether Freeze Preceded February Seizure Warrant

According to the plaintiffs, Tether blacklisted 10 Ethereum addresses holding exactly 42,417,785.62 USDT on October 30, 2025 after receiving an informal request from a Homeland Security Investigations (HSI) agent. They allege that no warrant, subpoena or court order directed Tether to freeze the assets at that time.

A magistrate judge in the Eastern District of North Carolina subsequently issued seizure warrant 5:26-MJ-1267-JG on February 19, 2026 — nearly four months after the blacklist was imposed.

Those addresses became part of a broader federal investigation into cryptocurrency investment fraud. U.S. authorities ultimately seized more than $61 million in USDT traced to wallets allegedly used to receive and launder proceeds from pig-butchering scams. Tether assisted investigators with transferring the seized assets.

The plaintiffs maintain that they acquired their USDT through secondary-market business transactions and deny any participation in the underlying fraud.

Lawsuit Challenges Tether's Blacklist Authority

The case seeks a declaratory judgment on whether Tether has the authority to immobilize USDT held by secondary-market owners without formal legal process. That question matters beyond this dispute: USDT is the largest stablecoin by market capitalization and circulates heavily in secondary-market trading, meaning any holder who obtained tokens outside a direct relationship with the issuer could face a similar freeze.

Rukthammachalern and Kasamvilas are pursuing claims including conversion, trespass to chattels and unjust enrichment. They also seek an injunction requiring the removal of the affected addresses from Tether's blacklist, protection against destruction of the tokens, damages, and disgorgement of yield allegedly earned from the reserve assets backing the immobilized USDT.

The dispute centers on a core feature of issuer-controlled stablecoins. Tether can use smart-contract controls to prevent specified addresses from transferring USDT — a capability that distinguishes USDT from permissionless tokens like Bitcoin or Ether, which no single entity can freeze, and which Tether has repeatedly deployed in coordination with sanctions authorities and law enforcement.

That capability has already produced far larger freezes. Tether blacklisted approximately $515 million across 371 Ethereum and Tron addresses during a 30-day period earlier this year. In another enforcement action, $344 million across two Tron wallets linked to suspected sanctions evasion was frozen.

$42.4M Remains Tied to $61M Fraud Case

The North Carolina investigation began after HSI received a victim report involving a fraudulent crypto investment platform. Investigators traced stolen funds through multiple wallets as operators attempted to obscure their origin and ownership.

The New York lawsuit does not determine whether the $42.4 million constitutes criminal proceeds. Instead, it challenges Tether's actions taken before the February warrant and seeks judicial review of the issuer's authority over USDT acquired outside a direct customer relationship. How the court draws that line — and whether it treats a private issuer's pre-warrant cooperation with law enforcement as permissible or as overreach — is likely to be closely watched by other stablecoin issuers that maintain similar freeze functions.

The case is Rukthammachalern et al. v. Tether Holdings, S.A. de C.V. et al., No. 1:26-cv-07400, in the Southern District of New York.