Legal risks for the largest stablecoin issuer are reaching a new level. Two entrepreneurs from Thailand have filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York, challenging the blocking of 42.4 million USDT that occurred in October 2025. The plaintiffs' key argument is the absence of an official freeze order at that time, which calls into question the legitimacy of the company's actions.
In my assessment, the situation is far deeper than it appears at first glance. Tether, based on case materials, acted on an informal request from the U.S. Homeland Security Investigations (HSI), citing an investigation into a large-scale "pig butchering" fraud scheme with damages estimated at $61 million. However, a formal seizure order was only issued by authorities in the Eastern District of North Carolina in February 2026—four months after the blocking.
Legal vacuum or precedent?
Notably, the plaintiffs do not deny the connection of the frozen funds to criminal activity. Their claim focuses on the issuer's procedural authority: did Tether have the right to take measures without a court order? This raises a fundamental question about the role of private companies in executing government functions, especially in jurisdictions where the regulatory framework for digital assets remains unclear.
For the market, this is a troubling signal. If the court rules in favor of the plaintiffs, Tether could face a wave of similar lawsuits, undermining confidence in its operational model based on rapid responses to government requests. On the other hand, dismissing the lawsuit would strengthen the issuer's position as a de facto law enforcement tool, creating a dangerous precedent for the decentralized ecosystem. I am following developments closely—this case could redefine the boundaries of responsibility for stablecoin issuers.