Tether sued over alleged unlawful $42.4M USDT freeze

Tether is facing a New York lawsuit over its alleged freezing of roughly 42.4 million USDT in October 2025 without judicial authorization. According to the complaint, the stablecoin issuer subsequently burned and reissued those tokens to a government-controlled wallet. The action coincided with a broader $61 million fraud investigation, though the sources differ on whether authorities had obtained a warrant at the time Tether acted. The core dispute centers on whether Tether had legal grounds to unilaterally freeze and redirect user funds, raising questions about custodial control and regulatory compliance in stablecoin operations.

• Tether allegedly froze $42.4M USDT without prior court order, then burned and reissued the tokens to a government wallet.
• The freeze occurred during a $61 million fraud probe, with dispute over whether a warrant existed at the time of action.
• The case highlights tensions between stablecoin issuers' ability to freeze funds and users' legal protections against unauthorized asset seizure.