Two Thai businessmen have filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York, alleging the stablecoin issuer unlawfully froze approximately 42.4 million USDT without a warrant or other formal legal process.

Nutthawat Rukthammachalern and Natthawat Kasamvilas submitted the complaint on August 31, 2026. They state that Tether blacklisted ten Ethereum addresses holding precisely 42,417,785.62 USDT on October 30, 2025. According to the filing, the action followed an informal request from a Homeland Security Investigations agent and occurred without a subpoena, court order, or prior notice to the holders.

Discovery of the Freeze and Initial Response

Kasamvilas reportedly learned of the restriction only after attempting to transfer funds. When he contacted Tether, the company directed him to an email address associated with a Homeland Security Investigations agent rather than providing a legal explanation for the freeze, the complaint states.

The plaintiffs assert they obtained the tokens through ordinary secondary-market business transactions and maintained no direct customer relationship with Tether. They argue that the issuer’s technical ability to use smart-contract functions such as addBlackList and destroyBlackFunds does not confer legal authority over assets held by third parties who never agreed to Tether’s terms.

Warrant Issued Months Later

A formal seizure warrant numbered 5:26-MJ-1267-JG was issued on February 19, 2026, by a magistrate judge in the Eastern District of North Carolina. The warrant instructed Tether to burn the USDT at the flagged addresses and mint an equivalent amount for transfer into a government-controlled wallet.

Five days after the warrant, federal prosecutors announced the seizure of more than $61 million in USDT linked to alleged pig-butchering scams. These schemes typically involve fake romantic or social relationships used to steer victims toward fraudulent investment platforms. Investigators traced funds through multiple wallets that authorities said were designed to obscure origins. The Justice Department credited Tether with assistance in the broader operation.

The New York complaint notes that the specific 42.4 million USDT associated with the Thai plaintiffs remained frozen and had not been burned or transferred at the time the suit was filed. The plaintiffs contend the later warrant cannot retroactively validate the October freeze.

Claims and Requested Relief

The lawsuit seeks a declaratory judgment that the freeze and any planned destruction of the tokens are unlawful, an injunction requiring removal of the addresses from Tether’s blacklist, and an order preventing Tether from burning the tokens or issuing replacements before a final forfeiture ruling. The plaintiffs also request damages, including the return of any interest or other income Tether allegedly earned from reserves backing the frozen USDT, along with claims of conversion, trespass to chattels, and unjust enrichment. Punitive damages are also sought.

The complaint does not challenge the underlying criminal investigation or the government’s broader allegations concerning pig-butchering proceeds. It focuses on the sequence of Tether’s actions and the legal limits of an issuer’s power over secondary-market tokens held by parties with no direct contractual relationship.

Neither the plaintiffs’ ownership claims nor the government’s allegations regarding the disputed USDT have been adjudicated. As of early September 2026, Tether had not filed a public response to the New York complaint. A separate application seeking return of the funds was filed in North Carolina on July 31, 2026, and remains pending without a ruling on ownership or liability.

Tether has previously coordinated with U.S. authorities on large-scale freezes, including actions involving hundreds of millions of dollars in USDT. The current case raises questions about the point at which informal law-enforcement requests may authorize a private company to restrict tokens held outside any direct customer relationship.