Two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, have sued Tether in the U.S. District Court for the Southern District of New York over the blacklisting of ten Ethereum addresses holding 42,417,785.62 USDT. The complaint was filed on August 31, 2026, and refiled the following day before Judge Lewis J. Liman, naming Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants. The plaintiffs say they acquired the tokens on the secondary market and have no contractual relationship with Tether. They allege Tether froze the funds on October 30, 2025, solely on an informal request from a Homeland Security Investigations agent, without a warrant, subpoena or court order, more than three months before a February 19, 2026 seizure warrant from the U.S. District Court for the Eastern District of North Carolina. That warrant included a plan to burn the related tokens and reissue them to a government wallet. The plaintiffs do not fully deny that the funds were linked to a pig-butchering investment scam involving about $61 million; they dispute whether the freeze carried out before the court warrant was lawful. On-chain records show the ten addresses were batch-frozen within about two and a half minutes. The largest single address holds 26.1 million USDT and belongs to Kasamvilas. The plaintiffs have received about 101 USDT since the freeze. The complaint asserts five claims, including conversion, trespass to chattels and unjust enrichment in the alternative. It further alleges that on November 2, 2025, Tether emailed Kasamvilas pointing him to an HSI agent and stating it had no further information at this time, without disclosing that the company had already frozen the funds. A separate $61 million seizure of Tether tied to addresses associated with pig-butchering scam proceeds was announced by the U.S. Attorney’s Office for the Eastern District of North Carolina on February 24, 2026. As of September 3, 2026, USDT had a market capitalization of about $183.4 billion while holding its peg at approximately $0.999999. Tether has said its cooperation with law enforcement has frozen more than $4.4 billion in assets across work with more than 340 agencies in 65 countries, of which more than $2.1 billion was linked to U.S. authorities. In a statement on September 2, Tether described the suit as a baseless attempt to interfere with its work with global law enforcement, including the Department of Justice. CEO Paolo Ardoino stated that USD$ is not a safe haven for illicit activity. The company has invested $20 million in Argentine digital bank Uala. The 42.4 million USDT at issue is roughly 0.02 percent of USDT’s total supply. Tether retains the technical ability to freeze USDT at the contract level, a power it has exercised repeatedly, including when it froze $131 million in USDT tied to Iran’s central bank. The relevant contract functions are addBlackList, which blocks outbound transfers while still allowing an address to receive tokens, and destroyBlackFunds, which zeroes a blacklisted balance and decrements total supply. A separate Rule 41(g) motion for return of property in the Eastern District of North Carolina remains undecided. The case highlights the boundary between centralized stablecoin issuers’ freeze powers and due process when transfers are restricted on law-enforcement requests alone. The immediate milestone is Tether’s answer or motion to dismiss.