Tether Faces Court Dispute Over $344M Iran-Linked USDT Freeze

Key Insights:

• Tether faces court pressure over $344M USDT frozen in Iran-linked Tron wallets.
• The USDT issuer freeze powers move into focus as victims seek blocked USDT under the U.S. court order.
• USDT blacklist activity rises as Tether freezes over $1.26B across Tron and Ethereum.

Tether faces a new legal dispute after victims holding unpaid U.S. terrorism judgments against Iran asked a federal court in Manhattan to transfer 344,149,759 USDT frozen in two Tron wallets.

The wallets were previously blocked after U.S. authorities linked them to the networks of Iran’s Islamic Revolutionary Guard Corps and the Central Bank of Iran.

The filing asks the court to order the USDT-issuer to reduce the frozen wallet balances to zero. It also seeks approval for the stablecoin issuer to refund the same amount of USDT to a wallet controlled by the plaintiffs’ lawyers.

The court order centers on Tether’s dominance over USDT balances. Unlike Bitcoin and Ethereum, USDT allows issuer-level controls that enable Tether to freeze addresses and prevent transfers.

The filing argues that Tether already confirmed that ability in earlier law enforcement actions involving frozen and reissued stablecoins.

Tether Freeze on Iran-Linked Tron Wallets Draws Legal Scrutiny

The lawsuit on the USDT-issuer follows enforcement actions taken by the U.S. Treasury’s Office of Foreign Assets Control on April 24.

After the sanctions announcement, Tether froze about $344 million in USDT across the two Tron wallets tied to Iran-linked activity.

Blockchain analytics firm TRM Labs stated that the wallets received around $370 million through close to 1,000 transactions since March 2021.

The firm added that most of the funds remained inactive after late 2023. In response, TRM Labs described the pattern as reserve storage rather than active movement.

However, the filing states that Tether can transfer the assets because it controls the blocked balances. The motion also cited earlier cases in which the firm has worked with authorities to freeze digital assets linked to sanctions violations and criminal investigations.

Tether confirmed the freeze in a separate statement released after U.S. law enforcement requests. The company said the freeze prevented any further movement of the funds. However, Tether did not disclose who controlled the wallets or provide details about the alleged activity.

USDT Freeze Activity Expands Across Crypto Market

The legal dispute arises as Tether continues expanding its blacklist activity across the crypto market. Tether froze more than $514 million in USDT across 370 addresses over the past 30 days.

BlockSec data also showed that Tether blacklisted about $1.26 billion in USDT across Ethereum and Tron during 2025. Meanwhile, the T3 Financial Crime Unit, backed by Tether, Tron, and TRM Labs, is said to have frozen more than $450 million in alleged unlawful assets since its launch in 2024.

The case also comes as regulators and blockchain investigators increase focus on stablecoin activity tied to sanctions evasion and money laundering risks.

The Financial Action Task Force recently warned that stablecoins are playing a larger role in illicit transactions.

Separate quarterly data also showed that Tether slowed gold purchases tied to reserves backing the stablecoin during the first quarter. The company added about six metric tons of gold during the period compared with 27 tons in the previous quarter.

Tether’s reserves backing USDT included $117 billion in U.S. Treasury bills and about $19.8 billion in gold holdings as of March-end.

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