TLDR:Tether froze $42.4M in USDT after an informal HSI request, with no warrant issued at the time.A seizure warrant arrived in February 2026, months after Tether had already blacklisted the wallets.Plaintiffs argue Tether kept earning Treasury yield on reserves while their tokens stayed frozen.The lawsuit questions whether the warrant authorized Tether to burn and reissue the seized USDT.Two Thai businessmen have sued Tether over a Tether USDT freeze involving $42.4 million in stablecoin holdings. The case was filed in the US District Court for the Southern District of New York. According to attorney Ariel Givner, the plaintiffs say Tether froze their wallets without a warrant. The lawsuit centers on an informal request from Homeland Security Investigations made in October 2025. A court-issued seizure warrant only arrived months afterward, raising questions the complaint seeks answered.Freeze Preceded Court Order, Lawsuit ClaimsPlaintiffs Nutthawat Rukthammachalern and Natthawat Kasamvilas allege Tether blacklisted their Ethereum addresses on October 30, 2025. Givner wrote that the businessmen say Tether froze their assets “after an informal request from an HSI agent.” The frozen amount totaled 42,417,785.62 USDT, according to the filing. No warrant, court order, or advance notice accompanied the freeze, the lawsuit states.UPDATE – It appears that the $42.4M Tether freeze in this suit stems from a North Carolina pig-butchering case.HSI Raleigh opened it from a victim tip: romance/investment fraud, fake trading platform, then layering through wallets so the stolen USDT would look clean. On… https://t.co/W4bLfkIYRv— Ariel Givner (@GivnerAriel) September 1, 2026Givner explained that HSI’s Raleigh office “opened it from a victim tip.” The tip described romance and investment fraud run through a fake trading platform. Funds were allegedly layered through multiple wallets to obscure their origin, she wrote, describing the flow as “accumulate, layer, integrate.”One wallet named in the case, address 0xf3bF…A3eB, held roughly $26.1 million in USDT. Givner noted the wallet had already been mapped as a consolidation point before the government paperwork existed. She wrote that “the court paper arrived later,” well after Tether’s blacklisting action.A seizure warrant eventually followed on February 19, 2026, issued by the Eastern District of North Carolina. Warrant 5:26-MJ-1267-JG directed Tether to burn the frozen USDT. The order also called for reissuing equivalent tokens to a government-controlled wallet.Plaintiffs Challenge Tether’s Authority Over Frozen TokensThe complaint does not dispute the underlying criminal allegations tied to the case. Five days after the warrant, EDNC and HSI announced a $61 million USDT seizure. Officials described the funds as “traced to addresses allegedly associated with laundering proceeds,” per Givner’s account.Instead, the lawsuit argues Tether froze secondary-market holders before receiving any court authorization. Givner summarized the dispute plainly, writing that Tether “locked secondary-market holders first” and “kept earning Treasury yield” throughout the freeze. The plaintiffs say they could not touch their funds during that stretch.According to the filing, the main claims include a declaratory judgment against the freeze and burn. Additional counts cover conversion, trespass to chattels, and unjust enrichment tied to reserve yield. The plaintiffs also seek an injunction to remove the wallets from Tether’s blacklist.Givner framed the core dispute as whether “a stablecoin issuer can lock $42 million on an informal government ask” while continuing to collect interest. Requested relief includes lifting the freeze and damages if the tokens are destroyed. Punitive damages are also sought, though the case remains a complaint rather than a ruling.The post Tether Sued for $42.4M USDT Freeze Tied to Alleged Pig-Butchering Case appeared first on Blockonomi.