Tether Ordered to Hand Over $344M of Iran-Linked USDT-Court Forces Crypto Chaos!

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Tether faces court push to hand frozen Iran-linked USDT to victims

People who won lawsuits against Iran related to terrorism, but haven’t received compensation, are asking a New York federal court to require Tether to release 344,149,759 USDT (a type of cryptocurrency).

Summary

  • Victims seek 344,149,759 USDT frozen in two OFAC-blocked Tron wallets linked to Iran’s IRGC.
  • The motion asks Tether to zero out blocked balances and reissue equivalent tokens to plaintiffs.
  • The case tests whether issuer-frozen stablecoins can satisfy unpaid terrorism judgments in US courts.

The funds sit in two blocked Tron wallets tied to Iran’s Islamic Revolutionary Guard Corps.

I’m following this case where some creditors are trying to get Tether to release frozen USDT. Basically, they want Tether to unlock a bunch of funds that were previously blocked and send an equal amount of USDT to a wallet controlled by their legal team. They’re claiming these funds are tied to judgments they won against groups allegedly backed by Iran, and they’re trying to enforce those judgments by getting access to the USDT.

Filing cites Tether’s control

The legal document claims Tether can comply with the request because it has previously frozen and reissued its USDT cryptocurrency in response to law enforcement actions. It asserts that Tether is legally obligated to hand over any assets of someone who owes a debt, if it has the ability to do so.

The debate revolves around how USDT functions. Unlike cryptocurrencies like Bitcoin or Ether, USDT isn’t fully decentralized. Tether, the company behind USDT, can freeze or block accounts and prevent transactions when required by legal authorities or to comply with sanctions.

OFAC freeze set the stage

Following U.S. sanctions on cryptocurrency addresses connected to Iran on April 24th, wallets holding those funds were frozen. According to Crypto.news, Tether blocked approximately $344 million in USDT across two Tron addresses because U.S. authorities identified them as being linked to the Islamic Revolutionary Guard Corps (IRGC) and the Central Bank of Iran.

According to TRM Labs, these two digital wallets have received around $370 million in nearly 1,000 transactions since March 2021. The firm noted that the majority of these funds haven’t been moved since late 2023, suggesting they’re being held in reserve rather than actively used.

Wider Tether freeze activity grows

A recent court action follows the increasing activity of Tether in freezing assets. According to Crypto.news, the T3 Financial Crime Unit – supported by Tether, Tron, and TRM Labs – has blocked over $450 million in potentially illegal funds since it began operating in 2024.

Recent reports indicate that Tether has frozen over $514 million in USDT across 370 different digital addresses in the last month. According to data from BlockSec and reported by crypto.news, Tether has blacklisted a total of $1.26 billion in USDT on both the Ethereum and Tron blockchains as of 2025.

This request doesn’t guarantee the plaintiffs will actually receive any money. A judge still needs to determine if Tether is legally required to release the frozen USDT, based on New York law and federal laws related to terrorism funding.

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2026-05-15 13:37