Tether Hit With $42M Lawsuit Over Pre-Warrant USDT Wallet Blacklist
Tether faces a federal lawsuit in New York after blacklisting $42.4 million in USDT based on an informal law enforcement request months before a warrant was issued. The plaintiffs allege conversion and unjust enrichment, targeting the interest Tether earns on reserves while tokens remain locked. The legal challenge puts issuer authority over open-market stablecoins in the spotlight.
Two Thai businessmen have slapped Tether with a lawsuit in the Southern District of New York after the issuer blacklisted $42.4 million in USDT across ten Ethereum addresses. The core issue: Tether immobilized the funds following an informal law enforcement ping nearly four months before a magistrate judge signed an official seizure warrant.
The plaintiffs claim conversion and unjust enrichment, highlighting that Tether keeps earning interest on Treasury reserves backed against frozen tokens while users remain locked out. Because the tokens were bought on the open market, the suit challenges whether centralized issuers can freeze secondary-market liquid assets without formal legal process.
While federal prosecutors linked the underlying funds to investment fraud, the lawsuit focuses squarely on issuer power and procedural compliance. If the court rules against Tether, it could force centralized stablecoins to tighten blacklisting protocols and severely restrict pre-warrant actions across the sector.