Tether Faces Lawsuit Over Frozen $344M USDT Linked to IRGC

Tether is facing growing legal pressure after a group of terrorism victims and their families filed a lawsuit in Manhattan federal court seeking control of more than $344 million in frozen USDT. The legal action targets two Tron wallet addresses previously sanctioned by the U.S. Treasury Department over alleged ties to Iran’s Islamic Revolutionary Guard Corps (IRGC).

Attorney Charles Gerstein, representing the plaintiffs, submitted the filing in the U.S. District Court for the Southern District of New York. According to court documents, the wallets currently hold 344,149,759 USDT and were frozen earlier this year by the Office of Foreign Assets Control (OFAC). U.S. authorities previously identified the wallets as connected to IRGC-related activities.

The plaintiffs include survivors and relatives of victims affected by terrorist attacks allegedly linked to Iran-backed groups. Among them is a Jerusalem family that lost loved ones during a 1997 Hamas suicide bombing. Although U.S. courts awarded judgments in those cases years ago, many of the victims reportedly have not received compensation.

The lawsuit argues that Tether has direct operational control over the frozen USDT because the company can blacklist addresses and freeze assets on its network. Gerstein claims that if Tether can block the wallets, it can also transfer the funds under a court order. The plaintiffs are asking the court to require Tether to move the frozen stablecoins into a wallet controlled by their legal representatives.

The case highlights ongoing concerns surrounding centralized stablecoins and their role in enforcing sanctions compliance. Unlike decentralized cryptocurrencies such as Bitcoin or Ethereum, USDT can be controlled by its issuer, allowing Tether to freeze or potentially reissue tokens when required by authorities.

The lawsuit also follows recent scrutiny surrounding Tether’s actions involving Iranian-linked crypto platforms and exchanges.