Two Thai businessmen have filed a lawsuit against Tether over the freezing of roughly 42.4 million US dollars in USDT, arguing the stablecoin issuer acted without a court order when it locked the funds in October 2025. The case forms part of a wider fraud investigation involving 61 million dollars.
According to the brief prepared on the case, the freeze was carried out at the request of the US Department of Homeland Security. A formal seizure order did not follow until February 2026, months after Tether had already blocked access to the tokens.
The plaintiffs are demanding the release of the funds and are seeking possible punitive damages. Notably, they do not fundamentally dispute their involvement in the underlying scheme, which investigators describe as a pig-butchering fraud.
How the scheme operated
Pig-butchering schemes typically rely on perpetrators building trust with victims through personal or romantic contact before steering them toward fake crypto trading platforms. Victims are shown fabricated high returns to encourage further deposits, and withdrawals are then blocked once sufficient funds have been extracted.
Investigators tracing the proceeds of this particular scheme followed the stolen funds through multiple wallets and identified USDT holdings worth more than 61 million dollars, of which the 42.4 million dollars now in dispute was frozen by Tether.
Tether's freezing powers
Tether can technically freeze individual USDT holdings and regularly cooperates with law enforcement agencies on such requests. The company has used this capability in past cases tied to fraud and sanctions enforcement, though the present lawsuit centres on the sequence of events: a freeze acted upon at the request of a US federal agency, followed several months later by a formal court order.
For a European audience following the growth of stablecoin usage on the continent, the case is a reminder of how much discretion issuers such as Tether retain over frozen assets, and how the timing between an informal request from an agency and a subsequent judicial order can become a point of legal contention. USDT remains the most widely used stablecoin in trading pairs across European exchanges, making the terms under which Tether can lock user funds a matter of direct relevance to firms and individuals holding the token.
The lawsuit does not challenge the underlying fraud allegations themselves. Instead, it turns on the narrower question of whether the October freeze, executed months before the February 2026 seizure order, was properly grounded at the time it occurred.
