Tether is facing a lawsuit over its decision to freeze $42.4 million in USDT, with plaintiffs alleging the company acted on an informal U.S. law-enforcement request more than three months before a formal seizure warrant was issued. The complaint, filed by the affected parties, claims the freeze was premature and lacked the legal backing of a court order.
The timeline of the freeze
According to the lawsuit, Tether froze the funds before any warrant existed. The plaintiffs say the company responded to an informal request from U.S. law enforcement, and that request came well ahead of the seizure warrant. The gap between the informal nudge and the formal warrant sits at the heart of the case.
The complaint lays out a specific sequence: the informal request arrived, Tether froze the $42.4 million, and only later did the seizure warrant materialize. That order of events, the plaintiffs argue, makes the freeze legally questionable.
An informal request, not a warrant
The plaintiffs contend that Tether should have waited for a court-issued warrant before freezing customer funds. Instead, they say, the company complied with a request that carried no judicial weight. The lawsuit alleges that Tether's willingness to act on an informal request overstepped its obligations and harmed the account holders.
This isn't a case of a company following a judge's order. The plaintiffs are pointing to a more casual channel of communication, one that they say shouldn't be enough to lock up millions in digital assets.
What the lawsuit alleges
The lawsuit claims the freeze was unjustified because it wasn't based on a legal mandate. The plaintiffs are seeking to hold Tether accountable for the freeze, though the specific damages aren't detailed in the complaint's public summary. The case now moves forward in the courts, where the central question will be whether an informal request from law enforcement is sufficient grounds for a stablecoin issuer to freeze funds.
The outcome could set a precedent for how crypto companies handle informal government inquiries. For now, the plaintiffs are pressing their case, and Tether will have to answer for its decision to freeze the $42.4 million before the warrant was ever issued.
