Tether Faces $344 Million USDT Demand in Major Iran-Linked Court Battle

• Tether faces massive USDT turnover demand tied to sanctioned Iranian-linked cryptocurrency wallets.
• Plaintiffs cite previous FBI seizures supporting Tether’s capability controlling frozen digital assets.
• Court filing targets jurisdiction claims while terrorism damages exceed billions against Iran.

Tether has entered another major legal dispute after U.S. terrorism judgment creditors moved to seize more than $344 million in frozen USDT allegedly linked to Iran’s Islamic Revolutionary Guard Corps. The filing intensified attention around stablecoin issuers and their responsibilities under U.S. sanctions enforcement laws.

According to the court motion filed in Manhattan federal court, the plaintiffs asked the judge to compel Tether to transfer frozen USDT balances into a wallet controlled by the claimants. The filing argued that Tether already demonstrated technical control over USDT during previous law enforcement actions.

Additionally, the creditors stated that New York turnover law and federal terrorism enforcement statutes support the requested transfer. They maintained that Tether can burn tokens from blocked wallets and reissue equivalent balances elsewhere. Consequently, the plaintiffs argued that the company should comply with the turnover request.

The legal filing also referenced earlier cases involving U.S. authorities and Tether. In one example, the FBI reportedly worked with Tether during a 2025 seizure action involving sanctioned assets. Moreover, another case in Ohio allegedly involved Tether burning millions of USDT before reissuing replacement tokens to a law enforcement-controlled wallet.

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Plaintiffs Target Frozen Wallets Linked to OFAC Sanctions

Court documents showed that Tether froze the disputed wallets on April 24, immediately after the U.S. Treasury’s Office of Foreign Assets Control sanctioned the addresses. The plaintiffs argued that the frozen balances represent property interests connected to sanctioned Iranian entities rather than Tether’s own corporate holdings.

Besides targeting the frozen assets, the filing also attempted to establish jurisdiction over Tether within New York. The creditors argued that Tether maintains significant operational connections through reserve management relationships tied to Cantor Fitzgerald in New York. That claim could become central as the court evaluates whether it can compel the company to act.

The broader lawsuit involves terrorism-related judgments issued over the past two decades. According to the filing, the plaintiffs seek to enforce approximately $552.3 million in compensatory damages alongside $1.86 billion in punitive damages.

However, the case may also influence future legal treatment of stablecoin issuers during sanctions enforcement disputes. Regulators and legal analysts continue monitoring whether courts will increasingly require issuers to intervene directly in frozen digital asset holdings. Tether has not publicly announced whether it plans to challenge the turnover request in court.

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