Daily Crypto Briefs 
CASABLANCA, Sept. 2, 2026
Two Thai businessmen sued Tether over 42,417,785.62 USDT frozen across 10 Ethereum addresses, alleging the stablecoin issuer acted more than three months before U.S. authorities obtained a seizure warrant as USDT’s market value held near $183.3 billion.
Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the case against four Tether entities in the U.S. District Court for the Southern District of New York on Aug. 31. The federal docket lists the action as case 1:26-cv-07400 and records claims for declaratory relief involving personal property.
The complaint alleges Tether blacklisted the addresses on Oct. 30, 2025 after an informal request from a Homeland Security Investigations agent. It says a magistrate judge in North Carolina did not issue the related seizure warrant until Feb. 19, 2026.
Market data showed little sign that the dispute disturbed USDT’s dollar peg. CoinGecko’s historical table listed a $183.31 billion market capitalization and $53.09 billion in daily volume on Sept. 2, after an Aug. 31 close of $0.999768 and a Sept. 1 close of $0.999616.
Tether rejected the allegations. The company told CoinDesk that the lawsuit was a “baseless attempt” to interfere with its work with global law enforcement, including the Justice Department, to prevent unlawful USDT use.
The claims remain unproven. Neither the plaintiffs’ ownership assertions nor the government’s allegations that the disputed USDT was connected to investment-scam proceeds had been decided by a court when the complaint became public.
Tether
USDTTether Freeze Preceded the Warrant
The timing is the lawsuit’s central allegation. According to CoinDesk’s review of the complaint, the plaintiffs said they acquired the USDT through secondary-market business transactions and had no direct customer relationship with Tether.
They allege Tether used its smart-contract blacklist function to immobilize their tokens after receiving the informal HSI request. A blacklist does not require possession of the wallet’s private keys. It prevents the affected address from transferring the issuer-controlled token, even though other assets in the wallet may remain movable.
The plaintiffs want the court to order Tether to remove the addresses from its blacklist and stop any destruction of the frozen tokens followed by issuance of replacement USDT to a government wallet before a final forfeiture ruling. They also seek damages and the return of interest or other income allegedly earned on reserves backing the immobilized tokens.
Their causes of action include conversion, trespass to chattels and unjust enrichment. Those labels describe the plaintiffs’ legal theories, not findings that Tether violated the law.
The case turns a feature already visible in crypto enforcement into a direct property-rights dispute. Daily Crypto Briefs previously covered Tether freezing 72 million USDT after a large Monero-linked flow. The new suit asks a narrower question: what legal process must exist before an issuer may stop secondary-market tokens from moving?
The $61M Scam Case Sits Behind the Dispute
The frozen funds appear connected to a broader federal investigation. On Feb. 24, the Justice Department announced that agents had seized more than $61 million in USDT allegedly traced to cryptocurrency investment scams.
Prosecutors said fraudsters built trust through romantic or social relationships, directed victims to fake trading platforms and routed stolen funds through multiple wallets to conceal their source and control. The department credited Tether with helping transfer the seized assets.
That background does not resolve the Manhattan case. The plaintiffs are challenging Tether’s conduct before the February warrant and whether a later warrant authorized a burn-and-reissue process before final forfeiture. The Justice Department’s February statement did not name the two businessmen or decide their rights to the 42.4 million USDT.
Tether’s response places the case inside its law-enforcement cooperation model. The issuer has used address controls in sanctions cases, including freezes tied to 131 Tron wallets in an ISIS-K designation. Cooperation can preserve assets that might otherwise move, but this complaint asks a court to define the boundary between technical control and legal authority.
The difference between a freeze and forfeiture is important. A freeze blocks movement. Forfeiture transfers ownership to the government after the applicable legal process. The public record does not yet establish whether the disputed 42.4 million USDT has been burned and reissued, remains blacklisted, or will be addressed first in the North Carolina proceeding.
USDT’s Issuer Control Faces a Court Test
USDT’s market size makes the dispute broader than two wallets. Tether’s transparency page says its tokens are backed one for one with matching fiat currency and that circulation metrics are generally updated daily. Each token is designed to remain worth one dollar, but it is still governed by issuer-controlled smart-contract rules.
Self-custody therefore does not make USDT equivalent to bitcoin. A user may hold the private key while Tether retains the contract-level ability to blacklist the token address. The lawsuit could clarify what duties, notice or legal process apply when that power reaches a holder who says it never contracted directly with the issuer.
The reserve-income claim adds another layer. The plaintiffs allege Tether kept earning yield from assets backing the frozen USDT while they could not use the tokens. Tether’s recent KPMG audit reported a $6.8 billion reserve surplus, but that financial cushion does not answer who is entitled to income associated with blacklisted balances.
Broader crypto sentiment remained positive despite the market’s legal and geopolitical risks. Alternative.me’s Crypto Fear and Greed Index read 63, or Greed, on Sept. 2, down from 69 a day earlier.
Fear & Greed Index
Sept. 2, 2026The next checkpoints are service of the complaint, Tether’s formal court response and any ruling that coordinates the New York lawsuit with the North Carolina seizure process. Until then, the 42.4 million USDT figure, the pre-warrant timing and the plaintiffs’ ownership claims remain allegations under litigation rather than established liability.
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Primary sources and further reading
| Source | Title |
|---|---|
| | Justia docket: Rukthammachalern et al v. Tether Holdings et al |
| | CoinDesk: Tether lawsuit and company response |
| | U.S. Justice Department: $61 million USDT seizure |
| | Tether transparency page |
| | CoinGecko: Tether historical market data |
| | Alternative.me: Crypto Fear and Greed Index |
Fact-checked by: Daily Crypto Briefs Fact-Check Desk
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Frequently Asked Questions
Why is Tether being sued over 42.4 million USDT?
The plaintiffs allege Tether blacklisted 10 Ethereum addresses holding 42,417,785.62 USDT after an informal law-enforcement request and before a seizure warrant was issued. They are challenging the legal basis for the freeze and any burn-and-reissue transfer.
When did Tether allegedly freeze the USDT?
The complaint says Tether blacklisted the addresses on Oct. 30, 2025. It says the related federal seizure warrant was issued on Feb. 19, 2026.
What does Tether say about the lawsuit?
Tether called the lawsuit baseless and said it interferes with the company's work with global law enforcement, including the Justice Department, to prevent unlawful use of USDT.
Has a court ruled that the frozen USDT belongs to the plaintiffs?
No. The lawsuit is at the complaint stage, and neither the plaintiffs' ownership claims nor the government's allegations about the disputed funds have been decided by a court.
Can Tether freeze USDT in a self-custody wallet?
Tether's Ethereum token contract can blacklist addresses, preventing the USDT at those addresses from moving. The lawsuit asks whether and under what legal authority the issuer may use that power against secondary-market holders before a warrant or final forfeiture decision.