Victims holding unpaid U.S. terrorism judgments against Iran have filed a motion requesting a court order compelling Tether to transfer 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 previously frozen the assets.
Key Takeaways
- U.S. victims of terrorism with outstanding judgments against Iran are seeking to seize over $344 million in USDT.
- The motion targets USDT held in OFAC-sanctioned wallet addresses linked to the Islamic Revolutionary Guard Corps (IRGC).
- Plaintiffs argue Tether has both the technological capability and legal obligation to transfer these assets.
- The case highlights the intersection of cryptocurrency, sanctions enforcement, and international terrorism judgments.
- The legal action could set a precedent for how digital assets are treated in enforcing such judgments.
The plaintiffs, who have secured significant judgments against Iran over the past two decades, are aiming to enforce approximately $2.42 billion in combined compensatory and punitive damages. Their legal action, filed in the U.S. District Court for the Southern District of New York, contends that Tether, the issuer of USDT, has the capacity and is legally bound under New York law and federal statutes to facilitate the transfer. Specifically, the motion asks that Tether “zero out” the balances in two IRGC-linked wallet addresses and then reissue an equivalent amount of new USDT to a designated plaintiff wallet.
The filing asserts that Tether is obligated to turn over any property of a judgment debtor that it has the ability to transfer. It points to previous instances where Tether has complied with U.S. seizure orders, including a case in November 2025 where Tether transferred equivalent USDT amounts following a seizure warrant from the FBI. Another cited example from April 2025 involved Tether “burning” tokens from a targeted address and reissuing USDT to a law enforcement-controlled wallet.
Tether froze the wallets in question on April 24, following OFAC’s addition of these addresses to its Specially Designated Nationals (SDN) list. The plaintiffs maintain that the court can assert personal jurisdiction over Tether, citing that the company’s reserves are largely managed and custodied in New York through Cantor Fitzgerald. The legal strategy emphasizes that this action seeks the turnover of specific Iranian property interests held by Tether, rather than targeting Tether’s corporate assets directly.
The judgments the plaintiffs seek to enforce are substantial, comprising roughly $552.3 million in compensatory damages and $1.86 billion in punitive damages, stemming from multiple U.S. terrorism-related cases pursued over the last twenty years.
Potential Regulatory Precedent
This legal maneuver could establish a significant precedent in the enforcement of U.S. judgments against state-sponsored actors and terrorist organizations utilizing digital assets. The core of the legal argument rests on Tether’s role as a custodian and issuer of USDT, and its demonstrated capacity to freeze, burn, and reissue tokens in response to regulatory and law enforcement directives. If the court grants the plaintiffs’ motion, it would signify a strong judicial stance on the applicability of traditional asset seizure laws to decentralized digital currencies, particularly stablecoins backed by reserves. This could embolden other judgment creditors and law enforcement agencies to pursue similar actions against digital asset issuers and custodians holding assets linked to sanctioned entities. Furthermore, it may pressure stablecoin issuers to enhance their compliance mechanisms for transaction monitoring and asset blocking, aligning more closely with global financial regulatory frameworks such as the European Union’s Markets in Crypto-Assets (MiCA) regulation, which emphasizes consumer protection and market integrity. The case underscores the evolving legal landscape where traditional financial sanctions and enforcement mechanisms are being tested and adapted for the digital asset era.
Original article : www.theblock.co