Two entrepreneurs from Thailand have initiated a lawsuit against the issuer of the USDT stablecoin in a New York district court. The cause was the freezing of digital assets totaling $42.4 million, which the company carried out in October 2025. The plaintiffs claim that the block was executed without a corresponding court order, casting doubt on the legality of Tether's actions.
According to case materials, the issuer allegedly acted based on an informal request from the U.S. Homeland Security Investigations. This agency is conducting an investigation into a major fraud scheme known as "pig butchering," in which victims lost about $61 million. However, an official order for asset seizure was only issued in February 2026 by authorities in the Eastern District of North Carolina—four months after the funds had already been frozen.
Notably, the plaintiffs themselves do not dispute the connection between the frozen funds and the alleged criminal activity. Their claims focus exclusively on procedural aspects: whether the stablecoin issuer had the legal right to take such measures without an official court directive. This case raises a fundamental question about the balance between complying with regulatory requirements and protecting the rights of digital asset holders.
For the industry, this lawsuit could become a precedent-setting case, as it directly affects the mechanisms of interaction between stablecoin issuers and law enforcement agencies. If the court rules in favor of the plaintiffs, Tether and other similar companies will have to reconsider their internal protocols for responding to informal government requests, which could slow down the fight against financial crimes in the crypto space.
My analysis: The situation demonstrates the growing tension between the need for emergency responses to fraudulent schemes and strict adherence to legal procedures. However, in the long term, if Tether cannot prove the justification of its actions, this could undermine confidence in stablecoins as a tool that can be used without regard to jurisdictional nuances. The question is not whether the funds were linked to a crime, but who is authorized to make decisions about freezing and in what order.