Thai Businessmen Sue Tether Over $42 Million Frozen in Scam Investigation

Tether faces lawsuit over frozen digital assets

Two Thai businessmen have filed a lawsuit against Tether, the issuer of the USDT stablecoin, in a New York district court. They claim the company illegally froze $42.4 million in USDT in October 2025. A stablecoin is a type of cryptocurrency designed to stay at a fixed value, such as one U.S. dollar.

The plaintiffs argue that Tether locked their funds without a warrant following an informal request from U.S. Homeland Security Investigations. They are asking the court to unfreeze the funds and are seeking punitive damages.

Key facts about the case

• Tether froze $42.4 million in USDT in October 2025.
• A formal seizure warrant was not issued by authorities until February 2026.
• The funds are linked to a larger $61 million \"pig butchering\" scam, which is a type of long-term investment fraud.
• The plaintiffs do not deny their involvement in the scam but challenge Tether's legal authority to freeze the assets.

The legal dispute over freezing authority

The lawsuit centers on whether a private stablecoin issuer has the right to freeze assets based on informal law enforcement requests. According to the court filing, authorities in the Eastern District of North Carolina eventually issued a warrant in February 2026. This warrant ordered the tokens to be burned and reissued to a government-controlled wallet.

Attorneys for the plaintiffs suggest that Tether benefited by keeping the reserves and earning yield while the funds were locked. The legal team argues that a private issuer should not be able to freeze or reissue tokens without a proper legal warrant already in place.

What is confirmed and what remains unclear

It is confirmed that the $42.4 million was frozen months before a formal warrant existed. It is also confirmed that these funds are part of a broader investigation into a $61 million investment scam. The plaintiffs have explicitly chosen not to dispute the government's claim that the coins are proceeds from a scam.

However, it remains unclear if the court will side with the businessmen or the stablecoin issuer. The case will determine if Tether's actions were a legal use of its power or an unauthorized seizure of private property.

Why this case matters for the crypto industry

This case is important because it tests the limits of how much control stablecoin companies have over user funds. While freezing assets can help law enforcement stop crime, this lawsuit highlights concerns about due process and the legal requirements for seizing digital assets. The outcome could change how stablecoin issuers respond to informal requests from government agencies in the future.

Sources

• Cointelegraph