Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York on August 31, 2026. The plaintiffs allege that the stablecoin issuer froze 42,417,785.62 USDT across ten of their Ethereum addresses. The multi-million dollar freeze occurred on October 30, 2025, purportedly to comply with an informal request from a Homeland Security Investigations (HSI) agent - without any warrant, court order, or formal legal process at the time of execution.
Nutthawat and Natthawat only discovered the freeze when they attempted to transfer assets on-chain. When the plaintiffs sought clarification regarding the status of their funds, Tether referred them to the email address of the HSI agent who requested the freeze. The company provided no legal basis to the two businessmen. This unilateral freeze remained in effect for nearly four full months before a North Carolina judge issued a seizure warrant on February 19, 2026.
Smart Contract Functions and List of Claims
The fund freeze was executed using the ‘addBlackList’ function built into Tether’s Ethereum smart contract. The same smart contract code also features a ‘destroyBlackFunds’ function that allows the company to burn blacklisted USDT. Five days after the North Carolina warrant was issued, federal prosecutors announced the seizure of more than $61 million in USDT linked to a pig-butchering investment scam. However, the plaintiffs emphasized that their $42.4 million in assets remained frozen when the lawsuit was filed in late August.
The plaintiffs laid out claims including conversion, trespass to chattels, unjust enrichment, as well as requests for declaratory and injunctive relief. Nutthawat and Natthawat are asking the judge to order Tether to remove their ten wallet addresses from the blacklist. If the tokens have already been destroyed via the burn function, the plaintiffs are seeking full damages. They are also demanding all revenue or interest accrued on the $42.4 million USDT reserves held by Tether during the freeze period.
Limits of Issuer Authority in the Secondary Market
The lawsuit in the New York court tests a key boundary for the crypto industry: whether a private stablecoin issuer has the right to freeze third-party tokens freely circulating in the secondary market based solely on law enforcement requests without a court order.
For Tether, blacklisting addresses is nothing new. Throughout 2025, its blacklist included 4,163 wallet addresses across the Ethereum and Tron networks. These interventions continued in 2026, during which the company froze a total of $514 million across 370 different wallet addresses within a single 30-day period. The legal challenge by Nutthawat and Natthawat tests the authority of corporate entities behind the scenes to restrict access to user property.
Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
