Tether targeted for $344M in frozen USDT as Gerstein files in Manhattan

A motion filed in the U.S. District Court for the Southern District of New York asks a judge to order Tether to transfer 344,149,759 USDT that the issuer froze after an OFAC designation. The petition, brought by plaintiffs represented by Charles Gerstein, argues that the frozen stablecoins should be reissued to a wallet controlled by the victims’ counsel to satisfy long-unpaid terrorism judgments.

The filing names victims and families who hold U.S. court judgments tied to Iranian-backed attacks and specifies the exact token amount at issue. Plaintiffs rely on the fact that the Treasury Department’s Office of Foreign Assets Control (OFAC) designated two Tron addresses as connected to Iran’s Islamic Revolutionary Guard Corps (IRGC), a step the plaintiffs say converts the frozen USDT into “blocked property” that is subject to execution under federal law. The motion was lodged in Manhattan and frames the request as a turn to on-chain enforcement of legacy judgments.

From a market and regulatory perspective, the case highlights a structural distinction between permissionless assets like Bitcoin and issuer-controlled stablecoins such as USDT: Tether has administrative controls that allow freezing, blacklisting and token reissuance, capabilities it confirmed it used on April 23 to immobilize the $344 million in coordination with U.S. authorities. That technical ability lies at the core of the plaintiffs’ argument that Tether can both immobilize and transfer the same nominal amount.

The legal approach mirrors Gerstein Harrow LLP’s recent tactics in other matters, notably the dispute over frozen ether on Arbitrum tied to the KelpDAO exploit. Those earlier proceedings tested whether on-chain freezes can be treated as attachable property for judgment enforcement; the new Tether motion scales that theory to a much larger, sanctioned stablecoin pool. The outcome will be watched closely by stablecoin issuers, regulators and judgment creditors alike.

Analysts and legal experts say the case sets up two clear paths: a court decision favoring plaintiffs could prompt a wave of similar enforcement attempts and force issuers to reassess freeze policies and litigation exposure; a ruling for Tether or for government primacy over frozen assets would reinforce the role of sanctions and limit private execution against blocked property. Either result would reshape incentives for compliance, custody practices and how victims seek redress in the digital asset era.