CoinDesk
A Manhattan federal judge is being asked to order Tether to surrender more than $344 million in frozen USDT — 344,149,759 tokens held at two Tron wallet addresses the Treasury Department has already designated as property of Iran's Islamic Revolutionary Guard Corps. The Thursday filing in the Southern District of New York, brought by attorney Charles Gerstein, seeks to convert those frozen balances into compensation for plaintiffs holding long-unpaid U.S. terrorism judgments against Iran, including survivors of the 1997 Hamas suicide bombing in Jerusalem.
The legal theory leans on a feature unique to centrally-issued stablecoins: Tether retains administrative controls that allow it to freeze wallets, blacklist addresses, and reissue balances elsewhere — capabilities that don't exist for native crypto like bitcoin or ether. Because Tether has already immobilized the funds in response to OFAC's sanctions action, the plaintiffs argue the company is fully capable of transferring them to judgment creditors, treating the frozen USDT as blocked property of a state sponsor of terrorism subject to execution under federal law.
Why it matters
Gerstein's broader strategy is becoming legible. He has now deployed the same playbook in the North Korea-linked Arbitrum dispute over Lazarus-attributed rsETH from the KelpDAO hack, in separate litigation against privacy protocol Railgun DAO, and now in this IRGC-tied USDT action — three different crypto venues targeted because their architecture permits freezing or redirecting assets. The legal framing in the Tether case is the cleanest of the three: the ownership question that muddied the Aave fight over stolen ether — whether hacked funds ever legally became the attackers' property — does not apply here, because OFAC has already declared the Tron wallets belong to the IRGC.
Market impact
For Tether, the precedent risk is real. USDT's circulating supply rests on the assumption that tokens, once frozen, stay frozen but otherwise remain functionally equivalent to dollars.
Frequently asked questions
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What is Charles Gerstein asking the court to do?
He is asking a Manhattan federal judge to order Tether to transfer 344,149,759 frozen USDT — over $344 million held at two OFAC-designated Tron wallet addresses — to a wallet controlled by counsel for plaintiffs holding unpaid U.S. terrorism judgments against Iran.
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Why can Tether freeze or reissue USDT but not Bitcoin or Ether?
Unlike decentralized networks, USDT is a centrally issued stablecoin with administrative controls that let Tether freeze wallets, blacklist addresses, and in some cases reissue balances elsewhere. Bitcoin and Ether generally cannot be unilaterally altered by any issuer.
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How is this case different from the North Korea-linked Arbitrum fight?
In the Arbitrum dispute over Lazarus-attributed rsETH, ownership of the stolen funds was contested — Aave argued hacked crypto never legally became the attackers' property. Here, OFAC has already designated the Tron wallets as IRGC property, which the plaintiffs argue makes the ownership question and the path to…
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What precedent risk does this case create for Tether?
A court-ordered reissue to private litigants would extend Tether's administrative powers beyond OFAC sanctions blacklists and into satisfying civil judgments, potentially reshaping how USDT holders and exchanges view the legal status of frozen tokens.
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Who are the judgment creditors bringing the case?
They include victims and families pursuing long-unpaid U.S. court awards against Iran, among them survivors of the 1997 Hamas suicide bombing in Jerusalem, who collectively hold billions of dollars in unpaid terrorism-related judgments.
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