Two Thai businessmen have sued Tether in a New York federal court over its freezing of $42.4 million in Tether USDt (USDT), arguing the stablecoin issuer froze the funds illegally — months before any seizure warrant existed — based on an informal request from US Homeland Security Investigations.
The dispute grows out of a $61 million alleged pig-butchering case. According to the complaint and a US Justice Department announcement, authorities in the Eastern District of North Carolina obtained a seizure warrant in February 2026 covering the funds, directing that the tokens be burned and reissued to a government wallet. The freeze itself, however, dates to October 2025, when Tether acted on the informal HSI request.
The Plaintiffs' Case
The two men deny any connection to the alleged scam. Their lawyer, Mark Beckett of Beckett Law, said in a statement: "My clients received USDT as payment in legitimate commercial transactions, in the normal course of business."
The complaint argues the warrant fails to establish probable cause and that the government "has failed to make even the most basic showing" that the USDT at the addresses is subject to forfeiture. It seeks to have the funds unfrozen and asks for punitive damages. Attorney Ariel Givner, who initially commented that the filing did not deny the men's involvement, corrected herself on X to acknowledge the men "vigorously and categorically deny the government's allegations."
All fraud allegations remain just that — allegations — and are contested by the plaintiffs.
Why It Matters
The case puts stablecoin freeze authority under a legal spotlight. USDT is centrally issuable and freezable at the token level; that capability is precisely what lets issuers respond quickly to law-enforcement requests, and it has made Tether a routine partner in recovering proceeds of crypto fraud, from pig-butchering operations to sanctions enforcement.
But the same capability means funds can be locked on an informal request, before any court has found probable cause. The complaint frames that sequencing as the core problem: assets used in legitimate commerce, frozen on "faulty assumptions," with the burden of unwinding the error falling on the owners.
For exchanges, issuers and corporate treasuries holding stablecoins, the suit is a live test of what due process looks like when the dollar in question is a database entry someone else can pause. A finding for the plaintiffs would not eliminate issuer freezes, but it could raise the evidentiary bar for complying with informal government requests — a standard every major stablecoin issuer would then have to price in.
TrustGrade tracks the security posture of exchanges, issuers and infrastructure providers. Verified, registry-backed security scoring arrives with TrustGrade Code Scoring in December 2026.