Tether Freezes $344 Million in USDT on Tron Tied to Illicit Activity

Tether issues USDT with smart-contract controls that allow it to blacklist addresses and prevent tokens from moving, a centralized power the company has used to assist law-enforcement and sanctions actions. The disputed funds were linked by U.S. authorities to a wider $61 million cryptocurrency investment-fraud case involving alleged “pig-butchering” schemes. The lawsuit could test how far a private stablecoin issuer may go in immobilizing blockchain assets before obtaining formal judicial authorization.

Nutthawat Rukthammachalern and Natthawat Kasamvilas filed their complaint on Aug. 31, 2026, in the U.S. District Court for the Southern District of New York. They allege Tether blacklisted 10 Ethereum addresses holding 42,417,785.62 USDT on Oct. 30, 2025, following an informal request from a U.S. Homeland Security Investigations agent, although a seizure warrant was not issued until Feb. 19, 2026. The plaintiffs are seeking removal of the blacklist, access to the tokens, disgorgement of income allegedly earned from reserves backing the frozen USDT, and punitive damages.

USDT, the largest U.S. dollar stablecoin, is managed by centralized issuer Tether. The company can remotely freeze tokens in specific wallets at the request of law enforcement agencies, making it a key partner for the U.S. Department of Justice and Homeland Security Investigations in tracing funds linked to money laundering, fraud and sanctions evasion.

Tether said on February 27, 2026, that it had frozen about $4.2 billion in crime-linked USDT to date, including $3.5 billion since 2023. The Justice Department and Homeland Security Investigations previously announced on February 24 that they had seized about $61 million in funds tied to fraud and money laundering with Tether’s assistance.