Nutthawat Rukthammachalern and Natthawat Kasamvilas filed suit Aug. 31 challenging Tether's authority to blacklist their wallets on an informal HSI request before any court order existed.
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Thai businessmen sue Tether over $42.4M USDT freeze without warrant
Two Thai businessmen sued Tether in New York federal court, alleging the stablecoin issuer froze $42.4 million USDT in October 2025 without a warrant, months before authorities obtained a seizure order.
The complaint, filed Aug. 31 in the U.S. District Court for the Southern District of New York, names Nutthawat Rukthammachalern and Natthawat Kasamvilas as plaintiffs and four Tether entities as defendants, according to court records. The allegations have not been adjudicated, and Tether had not filed a public response as of Sept. 2.
Tether used the addBlackList function on its Ethereum smart contract to block transfers across ten addresses holding precisely 42,417,785.62 USDT on Oct. 30, 2025. The plaintiffs say the freeze followed an informal request from a Homeland Security Investigations agent, with no warrant, court order, or subpoena in place. A magistrate judge in the Eastern District of North Carolina issued seizure warrant 5:26-MJ-1267-JG on Feb. 19, 2026, ordering Tether to burn the frozen tokens and mint replacements into a government-controlled wallet.
The case tests whether a private stablecoin issuer can restrict secondary-market tokens on an informal law-enforcement request before judicial authorization exists. Tether froze $514 million across 370 addresses in one 30-day period in 2026, and its 2025 blacklist covered 4,163 Ethereum and Tron addresses, according to BlockSec data cited in prior reporting. A ruling against Tether could reshape how stablecoin issuers respond to law-enforcement requests across the sector.
Kasamvilas discovered the restriction after attempting a transaction, according to the filing. When he contacted Tether, the company directed him to an HSI agent's email address without explaining the legal basis for blocking the funds. The plaintiffs say they acquired the tokens through secondary-market business transactions and had no direct customer relationship with Tether, arguing that technical control over the smart contract does not confer legal authority over tokens held by third parties.
Five days after the warrant was issued, federal prosecutors announced the seizure of more than $61 million in USDT linked to pig-butchering fraud. HSI Raleigh opened the investigation after receiving a victim's tip, tracing funds through multiple wallets that authorities said were used to obscure the money's origin. The Justice Department publicly credited Tether for assisting with the asset transfer, and Tether confirmed its involvement in the broader operation.
However, the plaintiffs' specific 42.4 million USDT remained frozen when the case was filed. The complaint argues the February warrant could not retroactively validate the October freeze and disputes whether a seizure warrant permits burning named property and replacing it with newly minted tokens before a final forfeiture judgment.
Claims target freeze authority and reserve income
The claims include conversion, trespass to chattels, unjust enrichment, and requests for declaratory and injunctive relief. The businessmen want Tether ordered to remove the blacklist, pay damages if the tokens are destroyed, and surrender income allegedly earned from reserves backing the frozen USDT.
The case raises questions about due process for stablecoin holders who acquire tokens on secondary markets. Unlike bank customers protected by account-freeze procedures, USDT holders rely on Tether's contractual terms and its cooperation policies with agencies such as HSI. The outcome could set precedent for other stablecoin issuers including Circle's USDC, which maintains similar blacklist capabilities on its smart contracts. The plaintiffs separately filed an application in North Carolina on July 31 seeking the return of the USDT, and neither proceeding has produced a judgment on ownership or Tether's liability.
The next procedural step will be service of the complaint and Tether's response. The court could also consider an early injunction request if the plaintiffs seek immediate protection against burning or reissuing the disputed tokens.
This article is for informational purposes only and does not constitute investment advice.
