The freeze of USDT in the amount of $42.4 million became the reason for a lawsuit against Tether in federal court in New York: two Thai entrepreneurs claim that the company closed access to their stablecoins before the United States authorities obtained a court order to seize the assets.
Why USDT Owners Filed a Lawsuit
On October 30, Tether blacklisted several addresses on the Ethereum network. According to the plaintiffs, these wallets belonged to Nuttawat Rukhamachalern and Nattawat Kasamvilas.
The entrepreneurs state that the decision to freeze followed an informal request from a U.S. Homeland Security Investigations agent. At that time, according to the plaintiffs, the U.S. authorities did not have a court order or a warrant to seize the funds.
The plaintiffs claim that they received the disputed stablecoins through secondary market transactions and did not enter into direct contracts with Tether. In their view, the issuer’s possession of a technical tool to restrict USDT movement via smart contract does not mean the right to dispose of assets that belong to third parties.
What Authorities Say and What Plaintiffs Demand
U.S. law enforcement authorities link the frozen stablecoins to several circumstances at once:
- an investment fraud investigation;
- a connection to the “Pig Butchering” case;
- alleged damages of more than $61 million.
The order to seize the assets appeared on February 19, 2026. The case materials state that the document provided for the destruction of the frozen USDT, the issuance of the same number of new tokens, and their transfer to a wallet controlled by U.S. authorities.
Nuttawat Rukhamachalern and Nattawat Kasamvilas are asking the court to lift the restrictions from the addresses, prohibit the destruction of tokens, and recover possible damages. In addition, the entrepreneurs want to receive the income that, in their opinion, Tether could have earned from the reserves backing the frozen stablecoins.
How Tether Freezes USDT and Why It Can Happen
USDT can be frozen not through a wallet application, but at the address and smart contract level. If an address is blacklisted, token movement is restricted regardless of where a person stores their keys: on an exchange, in a mobile wallet, or in a cold wallet.
In this dispute, the plaintiffs specifically point out that Tether used a technical tool to restrict USDT movement via smart contract. The reason, according to their version, was the request of a U.S. Homeland Security Investigations agent, and the authorities link the tokens to a fraud investigation.
Most often, the risk of USDT being frozen arises when an address is linked to:
- a fraud investigation;
- requests from law enforcement and regulators;
- sanctions restrictions;
- assets that may be subject to seizure or litigation.
What to Do if USDT Is Frozen and How to Reduce the Risk
If an address with USDT is frozen, you should first check whether the restriction is really related to the specific address: look at the transactions in the network explorer, verify the address, and make sure the problem is not caused by the wallet or exchange interface.
- save transaction hashes, addresses, and correspondence with counterparties;
- contact the support of the wallet, exchange, or Tether if the freeze is related to USDT;
- do not try to bypass restrictions through dubious services;
- if the amount is large, consult a lawyer who works with digital assets and international requests.
It is impossible to completely eliminate the risk of USDT being frozen, because the restriction can be triggered at the token level. The risk can be reduced by checking counterparties, avoiding opaque secondary market transactions, and keeping documents that confirm the origin of funds.
USDT, MiCA, and Alternatives in Europe
In the USDT market, the main question now is not only the price of the stablecoin, but access to it: the dispute over $42.4 million USDT shows that the issuer can restrict token movement, and users challenge such decisions in court.
In the EU, additional pressure is created by MiCA — regulation for crypto assets and stablecoins. For issuers, this means stricter requirements, and for users — the risk that USDT availability on certain European platforms will depend on the rules of a particular jurisdiction and the platform’s policy.
As alternatives, users may consider other stablecoins, such as USDC, but each such asset has its own issuance, reserve, and freeze conditions. Therefore, replacing USDT does not eliminate all risks, but transfers them to another issuer and another infrastructure.
Why the Dispute Matters for the Stablecoin Market
The case concerns USDT specifically, and not other stablecoins like USDC, but the dispute again raises a broader question: where is the line between the issuer’s technical capabilities and the rights of digital asset owners.
For Russia and Russians, the topic of stablecoin freezes remains sensitive, including due to sanctions related to Russia’s invasion of Ukraine. In the Russian financial agenda, such risks are discussed alongside issues of access to international infrastructure; among the participants in this agenda are Pyotr Fradkov and PSB Bank.
Tether has already had legal disputes over frozen tokens:
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- victims of Iranian terrorist attacks appealed to the Manhattan court;
- they sought to have more than $344 million USDT transferred to them;
- the plaintiffs tried to enforce U.S. court decisions to recover funds from Iran and seize digital assets linked to it.
