Victims with unpaid U.S. terrorism judgments against Iran have asked a Manhattan federal court to force Tether to hand over 344,149,759 USDT that’s currently frozen in two Tron wallets linked to Iran’s Islamic Revolutionary Guard Corps (IRGC).
In a court filing, the plaintiffs ask the judge to order Tether to reduce the blocked balances to zero and reissue the same amount of USDT to a wallet controlled by the creditors’ lawyers. The victims are trying to enforce civil judgments tied to attacks connected to Iran-backed groups and say Tether has the technical ability to comply because it has frozen and reissued USDT in prior law enforcement matters. As the filing puts it, “Tether is required to turn over any property of a judgment debtor that it is capable of turning over.”
The request highlights a core difference between USDT and fully decentralized tokens like Bitcoin or Ether: USDT is centrally issued and carries issuer-level controls. Tether can block addresses and render balances immobile in response to sanctions or law enforcement directives—capabilities that underlie the plaintiffs’ argument that the company can transfer the frozen funds.
The wallets at issue were frozen after the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Iran-linked crypto addresses on April 24. Crypto.news reported that Tether blocked roughly $344 million in USDT across two Tron addresses after U.S. authorities tied them to IRGC and Central Bank of Iran networks. TRM Labs’ analysis found the two wallets received about $370 million across nearly 1,000 transactions since March 2021, and that most of those funds had been dormant since late 2023—behavior TRM described as reserve storage rather than active trading.
The legal push arrives amid a broader expansion of Tether’s role in freezing suspect crypto assets. The T3 Financial Crime Unit—backed by Tether, Tron and TRM Labs—has said it froze more than $450 million in suspected illicit assets since its 2024 launch. Separate market trackers reported Tether froze over $514 million in USDT across 370 addresses in a recent 30-day snapshot, and BlockSec data cited by crypto.news put Tether’s 2025 blacklist total at roughly $1.26 billion across Ethereum and Tron.
Importantly, the court filing does not mean the plaintiffs have yet recovered the money. A judge must still decide whether Tether can be compelled under New York turnover rules and federal terrorism-enforcement laws to transfer the frozen USDT to satisfy the victims’ judgments—an outcome that, if allowed, could deepen the legal responsibilities of centralized stablecoin issuers in cross-border enforcement.
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