Two Thai businessmen have filed a lawsuit in a New York district court against stablecoin issuer Tether, alleging it illegally froze $42.4 million in USDT in October 2025 without a warrant.
The plaintiffs, who did not dispute their involvement in a pig butchering investment scam, argue that Tether acted without legal authority when it froze the funds following an informal request from U.S. Homeland Security Investigations. A formal seizure warrant for the assets was only issued in February 2026 as part of a $61 million fraud case in the Eastern District of North Carolina. The warrant authorized the burning and reissuance of the tokens to a government-controlled wallet.
The lawsuit challenges the authority of stablecoin issuers to freeze user funds and seeks the unfreezing of the assets, along with potential punitive damages. The plaintiffs contend that Tether locked secondary-market holdings first, continued earning Treasury yield on the reserves, and only later received a warrant that, in their view, does not authorize a private issuer to freeze, burn, or reissue tokens.
The case follows a separate February ruling in which a U.S. court sentenced a dual national of China and St. Kitts and Nevis to 20 years in prison for orchestrating a $73 million pig butchering scam.
