Tether Urged To Unfreeze $344M In USDT Linked To Terror Activities

The group of terrorism victims and families has filed a lawsuit in Manhattan federal court to force Tether to deposit over $344 million in USDT. This reserve was seized by the U.S. Treasury for connections to Iran’s Islamic Revolutionary Guard Corps (IRGC).

Tether In Crosshairs As Lawyer Urges Unfreezing of $344M USDT

Attorney Charles Gerstein made the filing against Tether on Thursday. He represents plaintiffs, who hold long-standing U.S. judgments against Iran for alleged involvement in terrorist attacks, in the U.S. District Court for the Southern District of New York.

In the filing, the plaintiffs claim to have control of 2 Tron blockchain wallet addresses containing 344,149,759 USDT, which are currently frozen. The wallets were barred earlier this year by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). At the time, OFAC singled them out as linked to the IRGC.

The creditors requested the court to move the frozen Tether USDT stablecoins from the sanctioned wallets. They then asked them to transfer an equal number of stablecoins to their legal team’s wallet.

Survivors and relatives of individuals related to terrorism against Iran are among those seeking the funds from Tether. It includes as a family from Jerusalem that lost relatives in a 1997 Hamas suicide bombing. It has been decades since those cases were awarded, and their judgments haven’t been paid.

What Is The Argument All About?

The argument in the courts is about the design of Tether’s USDT. It’s worth noting that unlike the decentralized cryptocurrencies (Bitcoin or Ethereum), Tether is still under centralized control of the stablecoin infrastructure. That power allows the company to freeze the tokens, blacklist addresses, and in some cases, reissue assets to new wallets.

In the filing, Gerstein indicated that the previous court order to freeze the wallets shows Tether already has operational control over them. Therefore, he added that the company can transfer them at court’s command.

The case is part of a larger legal initiative that Gerstein is waging against digital asset platforms that can freeze or divert cryptocurrencies. For context, he has recently made similar allegations in court actions related to North Korea-related cyber ops against the Arbitrum platform. In addition, he’s handling another case involving privacy-focused protocol Railgun DAO.

The plaintiffs in the latest filing contended that the ownership dispute was not as hotly contested since OFAC had already labeled the Tron wallets as IRGC-controlled assets. Hence, they believe that it would allow the blocked USDT to be seized under U.S. terrorism laws.

Earlier, Tether banned Iranian exchange Wallex wallet amid the US-Iran war.

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