Two Thai businessmen sue Tether over frozen $42.4M USDT

Two Thai businessmen have filed a lawsuit against Tether in the US District Court for the Southern District of New York. They allege that Tether froze their wallets in October 2025 on the basis of an informal request from the US investigative agency Homeland Security Investigations, without a court order or judicial authorisation. In total, more than $42.4 million in USDT is at stake.

In brief:

• Tether froze the wallets of two Thai businessmen at the informal request of US investigators, without a court order.
• The frozen USDT was later burned and reissued to a government wallet following an order that was only issued in February 2026.
• The lawsuit does not contest the underlying criminal claims, but it does contest Tether’s authority to act without prior judicial approval.

Freezing without a court order in pig butchering case

According to lawyer Ariel Givner, the case is linked to a large-scale investment fraud case in the US state of North Carolina. It concerns a so-called pig butchering scheme: fraudsters build a relationship of trust with victims through romantic or friendly conversations, after which they persuade them to invest via a fake trading platform. The stolen amounts were then routed through multiple wallets to conceal their origin.

On 31 October 2025, Tether placed the Ethereum addresses of the Thai claimants on a blacklist, purely on the basis of an informal request from HSI Raleigh, the local branch of Homeland Security Investigations. At the time, no arrest or search warrant existed. One of the frozen wallets contained approximately $26.1 million at the time.

Order only months later, USDT burned and reissued

Only on 19 February 2026, more than three months later, did the court for the Eastern District of North Carolina issue an order. That order instructed Tether to destroy the frozen USDT and reissue it to a government wallet. Five days later, the authorities announced the seizure of $61 million in USDT, which they said came from addresses linked to the laundering of money stolen from victims.

In their complaint, the claimants do not dispute that the government claims the coins originate from criminal activities. What they do contest is that Tether froze their assets before any court order existed, while Tether continued to earn interest on the underlying reserves in the meantime. They also argue that the eventual order does not authorise a private issuing institution to destroy and reissue tokens.

The case raises broader questions about the extent to which stablecoin issuers such as Tether can intervene in users’ assets on their own initiative or at informal government request. This is also relevant in light of discussions on stablecoin regulation, such as Singapore’s plans for a stablecoin licence with full reserve backing.