Tether faces suit over alleged unlawful freeze of $42.4 million USDT

Two Thai businessmen sued Tether over the alleged unlawful freezing of roughly $42.4 million worth of USDT. Nutthawat Rukthammachalern and Natthawat Kasamvilas filed the complaint on Monday in the U.S. District Court for the Southern District of New York. The complaint names four Tether entities. The case concerns USDT held across ten Ethereum addresses. According to the complaint, Tether blacklisted the addresses last October at the informal request of a Homeland Security Investigations agent. The complaint says Tether acted without a warrant or court order. More than three months later, a federal magistrate judge in North Carolina issued a seizure warrant. The warrant outlined a plan for Tether to burn the restricted tokens. The plan also called for replacement USDT to be minted and transferred to a government-controlled wallet. The plaintiffs argue that the warrant did not retroactively authorize the freeze. They also argue that the warrant did not permit Tether to destroy the original tokens before a final forfeiture judgment. Tether's USDT smart contract gives the company administrative functions to blacklist cryptocurrency addresses on networks including Ethereum. Blacklisted tokens remain visible on the blockchain but cannot be transferred. Tether can also burn USDT held at those addresses. In April, Tether said it worked with more than 340 law-enforcement agencies across 65 countries. Tether said that cooperation helped freeze more than $4.4 billion in assets connected to suspected unlawful activity. Tether CEO Paolo Ardoino said USDT was not a safe haven for illicit activity. He said Tether acts when it identifies credible links to sanctioned entities or criminal networks. Rukthammachalern and Kasamvilas said they acquired the USDT through secondary-market business transactions. They said they never opened Tether accounts. They also said they never bought tokens directly from Tether or agreed to its terms.