Tether Faces Lawsuit Over Freeze of 42.4 Million USDT Before U.S. Seizure Warrant

Tether is facing a new lawsuit over its freeze of 42.4 million USDT, with two Thai businessmen alleging the tokens were blocked months before U.S. authorities obtained a seizure warrant. For PSPs and other high-risk payment operators, the point is straightforward: a stablecoin issuer’s blacklist function can change access to funds before any formal court process lands.

1. The lawsuit was filed Monday (Aug. 31) in federal court by Nutthawat Rukthammachalern and Natthawat Kasamvilas. They argued that Tether markets USDT as “stable, fully backed, and freely transferable” and usable in blockchain transactions “as if it were U.S. currency,” while retaining the technical ability to block owners anywhere in the world from transferring or accessing their USDT, or to “burn” it at the push of a button.
2. According to the complaint, Tether froze the funds in October of last year after an informal law enforcement request. The plaintiffs said no warrants or other legal process were issued until February of this year, which is the timing gap at the center of the dispute.
3. The lawsuit asks the court to order Tether to remove the plaintiffs’ addresses from its blacklist, stop the company from destroying the frozen tokens, and issue replacements to a government-controlled wallet before any final forfeiture decision.
4. Tether told CoinDesk on Wednesday (Sept. 2) that the case “had no merit” and called it “a baseless attempt to interfere with Tether’s important work with global law enforcement, including the Department of Justice, to prevent the unlawful use of USDT.”
5. The timing matters because the stablecoin market is already shifting. PYMNTS reported Tuesday (Sept. 1) that 21 of the world’s biggest banks plan to introduce a U.S. dollar-denominated stablecoin in the first half of next year, with possible expansion to other G7 currencies and the euro as a priority.

That bank-led effort is part of a broader push to combine tokenized deposits and stablecoins into a portfolio of programmable money, routing transactions toward whichever form offers the best mix of liquidity, portability, regulation and reach. For high-risk merchants and PSPs, that means the old question of “can the asset move?” is now joined by “who can freeze it, and on what timeline?”