A filing in federal court in Manhattan asks Tether to turn over 344,149,759 USDT frozen in two OFAC-blocked Tron wallets. The request was made by victims holding unpaid U.S. terrorism judgments against Iran, with the tokens tied to addresses linked to Iran’s Islamic Revolutionary Guard Corps.
The proposed remedy is unusual but clear: Tether would reduce the balances in the blocked wallets to zero and reissue the same amount of USDT to a wallet designated by the plaintiffs’ lawyers. The creditors are trying to enforce court judgments connected to attacks attributed to Iran-backed groups.
Issuer control over USDT is at the center of the case
The motion relies on Tether’s ability to control USDT at the issuer level. According to the filing, Tether has already frozen and reissued tokens in prior law enforcement matters, which the plaintiffs cite as proof that the company can deliver the property in question. The filing states that Tether is required to turn over any property of a judgment debtor that it is capable of turning over.
That point matters because USDT does not function like Bitcoin or Ether. Tether can block addresses and stop balances from moving in response to sanctions measures or law enforcement action. The plaintiffs are using that feature as the legal basis to argue that the frozen stablecoins can be reached and transferred under court order.
Sanctions action on April 24 set up the dispute
The two wallets were frozen after OFAC sanctioned Iran-linked crypto addresses on April 24. Earlier reporting said Tether froze about $344 million in USDT across the two Tron addresses after U.S. authorities linked them to networks connected to the IRGC and the Central Bank of Iran.
TRM Labs said the wallets had received about $370 million across nearly 1,000 transactions since March 2021. It also said most of the funds stayed dormant after late 2023, describing the pattern as closer to reserve storage than active operational use.
Tether’s broader freeze activity adds context, but no transfer has been approved
The court push comes as Tether’s role in freezing on-chain assets keeps growing. Reporting cited the T3 Financial Crime Unit, backed by Tether, Tron and TRM Labs, as having frozen more than $450 million in suspected illicit assets since its launch in 2024.
Separate market updates said Tether froze more than $514 million in USDT across 370 addresses during a recent 30-day period. Data from BlockSec, cited by crypto.news, put Tether’s 2025 blacklist total at $1.26 billion across Ethereum and Tron.
The filing does not mean the plaintiffs have secured the assets. A judge still has to decide whether Tether can be compelled, under New York turnover rules and federal terrorism enforcement law, to transfer the frozen USDT.