Victims holding unpaid U.S. terrorism judgments against Iran have initiated legal proceedings, seeking a court order to compel Tether to surrender approximately $344 million in USDT. These funds are currently held in wallet addresses that have been blocked by the Office of Foreign Assets Control (OFAC), with Tether having frozen the assets. The plaintiffs aim to satisfy judgments totaling billions of dollars by having Tether remove the USDT from the identified wallets and reissue an equivalent amount to their designated wallets.
Key Takeaways
- A group of U.S. terrorism judgment creditors is pursuing a court order to seize over $344 million in USDT from Tether.
- The USDT in question is held in OFAC-sanctioned wallets linked to Iran’s Islamic Revolutionary Guard Corps (IRGC).
- Plaintiffs argue Tether has both the technical ability and legal obligation to comply with turnover orders, citing past instances of cooperation.
- The legal action seeks to enforce substantial judgments against Iran stemming from terrorism-related cases.
- Tether froze the wallets on April 24, coinciding with OFAC’s designation of these addresses.
The motion, filed in the U.S. District Court for the Southern District of New York, asserts that Tether possesses the technological capacity and is legally bound under New York’s turnover laws and federal statutes related to terrorism enforcement. The plaintiffs contend that Tether should zero out the balances in the IRGC-linked wallets and then reissue an equivalent value of new USDT to a designated wallet controlled by the plaintiffs.
The filing highlights Tether’s prior responses to U.S. seizure orders, stating that “Tether is required to turn over any property of a judgment debtor that it is capable of turning over, and Tether is concededly and obviously capable of turning over USDT because it has done exactly that in response to many U.S. seizure orders.” Specific examples provided include a November 2025 seizure case where Tether transferred USDT to the U.S. following a seizure warrant, and an April 2025 case in Ohio where Tether “burned” tokens from a targeted address and reissued USDT to a law enforcement-controlled wallet.
Tether’s decision to freeze the wallets on April 24 followed OFAC’s addition of these addresses to its Specially Designated Nationals (SDN) list on the same day. The plaintiffs maintain that the court can assert personal jurisdiction over Tether, a company based in El Salvador, due to the significant management and custody of its reserves occurring in New York through Cantor Fitzgerald.
The legal maneuver is specifically focused on the turnover of Iranian property interests currently held by Tether, rather than targeting Tether’s own corporate assets. The judgments that the plaintiffs seek to enforce aggregate approximately $552.3 million in compensatory damages and $1.86 billion in punitive damages, awarded across various U.S. terrorism-related cases over the past two decades.
Potential Regulatory Precedent
This case could establish a significant precedent for how U.S. courts and regulatory bodies interact with stablecoin issuers and other cryptocurrency custodians in enforcing sanctions and legal judgments. The argument that Tether has a legal obligation to actively facilitate the transfer of assets from sanctioned wallets, rather than merely freezing them, could shape future enforcement actions. If the court compels Tether to not only freeze but also to re-issue assets, it may set a new standard for the level of cooperation expected from cryptocurrency firms in complying with U.S. legal directives. This could also have implications for global regulatory frameworks, such as the European Union’s Markets in Crypto-Assets (MiCA) regulation, by highlighting the jurisdictional reach and enforcement powers that U.S. courts may assert over global digital asset service providers. The ruling could influence how other jurisdictions approach the intersection of digital asset regulation, sanctions enforcement, and private judgment collection.
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