Thai Businessmen Sue Tether Over $42M Freeze Without Legal Authorization

TLDR

• Thai nationals Nutthawat Rukthammachalern and Natthawat Kasamvilas initiated legal action against Tether in New York federal court on August 31, 2026, challenging a $42.4 million USDT freeze
• The stablecoin issuer reportedly blacklisted ten Ethereum wallets on October 30, 2025, following an informal communication from a Homeland Security Investigations official
• The freeze was executed without any warrant, judicial order, or formal legal documentation
• Authorities issued a seizure warrant in February 2026, several months after the initial freeze, directing Tether to destroy the frozen USDT and create new tokens for a government-controlled address
• The complainants are demanding monetary compensation, a court injunction, and return of profits Tether generated from reserve assets supporting the frozen stablecoins

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A legal challenge has been mounted against Tether by two Thai entrepreneurs in New York’s federal court system, alleging the digital currency company locked $42.4 million worth of USDT without proper legal backing.

The legal filing was submitted on August 31, 2026, to the U.S. District Court for the Southern District of New York. The case was brought forward by Nutthawat Rukthammachalern and Natthawat Kasamvilas.

The Freeze

The lawsuit alleges that Tether placed ten Ethereum wallet addresses containing 42,417,785.62 USDT on a blacklist on October 30, 2025. The complainants assert this action followed an unofficial communication from an agent with Homeland Security Investigations.

No judicial warrant, court directive, or subpoena existed to authorize Tether’s action at the moment of the freeze. The complainants claim they were not given advance warning.

After one complainant contacted Tether via email seeking clarification about the locked assets, the company allegedly provided only an HSI agent’s email contact instead of offering legal justification.

The freeze was implemented using Tether’s Ethereum smart contract feature called addBlackList to restrict the addresses. Another feature, destroyBlackFunds, enables the company to eliminate blacklisted USDT permanently.

The complainants maintain they acquired the digital tokens through secondary market transactions and never established a direct business relationship with Tether. They contend that Tether’s technical control over the smart contract doesn’t constitute legal jurisdiction over tokens in third-party possession.

The Warrant and the Seizure

Over three months following the initial freeze, a North Carolina magistrate judge issued a seizure warrant dated February 19, 2026. The warrant allegedly ordered Tether to eliminate the frozen USDT and generate equivalent tokens for a government-controlled digital wallet.

Federal prosecutors made a public announcement five days afterward regarding the seizure of over $61 million in USDT. Law enforcement officials stated the assets were connected to digital wallets associated with pig butchering fraud schemes.

The Department of Justice publicly acknowledged Tether‘s cooperation in facilitating the transfer. Tether released its own statement on February 25, 2026, acknowledging its participation in the enforcement action.

The complainants maintain the February warrant cannot provide retroactive legitimacy for the October freeze. They also question whether seizure warrants authorize token destruction prior to a final forfeiture determination.

At the time of filing their complaint, the plaintiffs assert their particular 42.4 million USDT remained in frozen status and had not been moved to the government’s wallet.

The legal action encompasses allegations of conversion, trespass to chattels, and unjust enrichment. The complainants claim Tether continued earning returns on reserve holdings corresponding to the frozen tokens throughout the entire duration.

They are requesting judicial intervention to compel Tether to lift the blacklist, prevent any scheduled token burn, compensate for damages, and surrender profits generated from the frozen assets.

Tether has not submitted a public legal response. No judicial authority has issued rulings on the freeze, the warrant’s validity, or the injunction petition.

The complainants additionally submitted a separate petition in North Carolina on July 31, requesting restoration of their digital assets. Neither legal proceeding has produced a determination regarding ownership or forfeiture.

The post Thai Businessmen Sue Tether Over $42M Freeze Without Legal Authorization appeared first on Blockonomi.

Source: https://blockonomi.com/thai-businessmen-sue-tether-over-42m-freeze-without-legal-authorization/