Why are victims asking Tether to transfer $344 million in USDT?

Victims holding unpaid US terrorism judgments against Iran asked a federal court to force Tether to transfer frozen USDT allegedly linked to Iran’s Islamic Revolutionary Guard Corps. The plaintiffs argue the assets should be used to satisfy long-standing court judgments.

What is the legal argument against Tether in this case?

The plaintiffs claim Tether already demonstrated control over the assets by freezing the wallets under US sanctions rules. They argue the company can therefore legally reissue an equivalent amount of USDT to wallets controlled by the victims’ legal representatives.

Why is USDT different from Bitcoin or Ethereum in this lawsuit?

Unlike Bitcoin or Ethereum, USDT is centrally managed and includes administrative controls. Those controls allow Tether to freeze addresses, blacklist wallets and potentially reissue tokens elsewhere.

What role does OFAC play in this case?

The US Office of Foreign Assets Control designated the Tron wallets involved as linked to Iran’s Islamic Revolutionary Guard Corps. Plaintiffs argue that designation makes the frozen assets legally subject to seizure under US terrorism laws.

Who is attorney Charles Gerstein and why is he important here?

Charles Gerstein has been pursuing legal strategies aimed at redirecting frozen crypto assets toward victims holding terrorism-related judgments. He has previously targeted crypto platforms tied to North Korea-linked hacking cases.

How does this relate to the Arbitrum and Railgun cases?

Gerstein previously pursued claims involving frozen crypto tied to alleged North Korean hacking proceeds connected to Arbitrum and Railgun. Those disputes involved more complicated ownership questions around hacked assets.

Why is the Tether case considered legally simpler?

The plaintiffs argue the ownership issue is clearer because US authorities already designated the wallets as belonging to the IRGC. In previous hacking-related cases, disputes emerged over whether stolen assets legally belonged to attackers.

Could this case set a precedent for stablecoin issuers?

Yes, the lawsuit could become a major test of whether courts can compel stablecoin issuers to redirect frozen digital assets to satisfy legal judgments. A ruling against Tether could influence how regulated stablecoins operate globally.

Tether faces $344M seizure demand

Written by Heidi Cuthbert Published May. 15 2026Last Updated May. 15 2026

Victims pursuing long-unpaid US terrorism judgments against Iran asked a Manhattan federal judge to order Tether to transfer more than $344 million in frozen USDT linked to Iran’s Islamic Revolutionary Guard Corps.

The filing in the Southern District of New York seeks to compel Tether to reissue 344,149,759 USDT held in sanctioned Tron wallets after the company froze the addresses in response to US Treasury sanctions imposed by the Office of Foreign Assets Control.

Attorney Charles Gerstein argued that because Tether already immobilised the assets, the company has the technical ability to redirect an equivalent amount of tokens to wallets controlled by the plaintiffs’ legal representatives.

The claimants include victims and relatives connected to terrorism-related court judgments against Iran, including survivors of a 1997 Hamas suicide bombing in Jerusalem.

Unlike decentralised cryptocurrencies such as Bitcoin and Ethereum, USDT contains administrative controls that allow Tether to freeze addresses, blacklist wallets and reissue tokens under certain circumstances.

The case extends Gerstein’s broader legal strategy targeting crypto platforms capable of freezing or redirecting assets, following separate litigation tied to North Korea-linked hacking proceeds involving Arbitrum and privacy protocol Railgun.

Plaintiffs argued the legal framework is more straightforward in the Tether dispute because US authorities have already designated the Tron wallets as belonging to the IRGC, potentially making the frozen stablecoins subject to seizure under federal terrorism laws.

At the time of reporting, Bitcoin price was $80,822.45.