Lawyer Behind Arbitrum Seizure Fight Now Targets Tether for $344M in Frozen USDT

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The victims of unpaid U.S. terrorism judgments against Iran want Tether to transfer more than $344 million in frozen USDT. Two Tron addresses that Tether froze in April due to U.S. sanctions against Iran are requested. The bid is led by attorney Charles Gerstein, who also pursued frozen crypto in the Arbitrum KelpDAO rsETH exploit dispute. Tether’s issuer-frozen stablecoins are the subject of this case.

Plaintiffs Seek Reissue of $344M in Frozen USDT

The request calls for the movement of 344,149,509 USDT from two frozen Tron addresses to a wallet under plaintiffs’ counsel’s control. The suggested mechanism would need Tether to immobilize the current tokens and reissue an equivalent quantity elsewhere.

The plaintiffs have unpaid judgments related to terrorism cases against Iran. They argue that the frozen USDT is blocked property linked to sanctioned Iranian entities and should be available to satisfy those judgments.

OFAC Added the Tron Addresses to Iran’s Central Bank Listing

The U.S. Office of Foreign Assets Control (OFAC) updated its Specially Designated Nationals list on April 24 and added two Tron addresses to the listing for Bank Markazi, Iran’s central bank. The listing is tied to Iran sanctions, counterterrorism sanctions, the Islamic Revolutionary Guard Corps-Qods Force and Hizballah.

That’s more accurate than just calling them “IRGC wallets.” As of April 23, Tether said it agreed with the U.S. government’s decision to freeze $344 million in USDT across two addresses. Later, Chainalysis linked those addresses to the OFAC update.

Tether’s Freeze Powers Sit at the Center of the Case

USDT is different from Bitcoin (BTC) or Ethereum (ETH) because Tether can freeze tokens at specific addresses. Tether’s own terms say the company can freeze tokens, blacklist addresses and restrict assets in response to legal or compliance concerns.

That makes the plaintiffs’ strategy possible. They are not asking the court to reverse a decentralized transaction but to order a centralized issuer to use controls that Tether says it already has.

Unlike Arbitrum, USDT Freeze Case Has Fewer Ownership Questions

Gerstein has used a similar theory in other crypto recovery efforts, including litigation around frozen assets tied to the KelpDAO rsETH exploit. That dispute is more legally tangled because it involves assets allegedly controlled by North Korea-linked hackers after a theft.

The Tether fight is more straightforward in one respect. The assets are already frozen by the issuer, and OFAC has listed the relevant Tron addresses under a sanctioned Iranian entity.

The unresolved question is whether a court can compel Tether to immobilize the frozen tokens and reissue an equivalent amount to private judgment creditors. That question could shape how far civil plaintiffs can go when frozen stablecoins remain under issuer control.

Court Order Could Test Stablecoin Enforcement Limits

Tether has frozen assets for law enforcement before, but this request asks a court to use those controls to satisfy civil terrorism judgments. If granted, the order could become a reference point for future attempts to attach frozen stablecoins linked to sanctioned states or terrorist groups.

For now, the verified development is narrower. Tether froze $344 million in USDT, OFAC added the two Tron addresses to an Iran-linked sanctions listing, and judgment creditors are trying to turn that freeze into a recovery source.