Victims of terrorism seeking to enforce judgments against Iran have filed a legal motion requesting a court order to seize and redistribute over $344 million in USDT. The USDT in question is held in wallet addresses previously frozen by Tether, identified as being linked to the Islamic Revolutionary Guard Corps (IRGC) and subsequently blocked by the Office of Foreign Assets Control (OFAC). This action represents a significant attempt by private entities to leverage cryptocurrency assets for the satisfaction of court-ordered damages.
Key Takeaways
- Terrorism judgment creditors are pursuing over $344 million in USDT frozen by Tether.
- The motion seeks to enforce substantial terrorism-related judgments against Iran.
- Plaintiffs argue Tether has both the technical means and legal obligation to comply with turnover orders.
- Precedents for Tether’s compliance with U.S. seizure orders are cited in the filing.
- Jurisdiction over Tether is asserted based on its business operations and asset management in New York.
The plaintiffs’ legal filing, submitted to the U.S. District Court for the Southern District of New York, contends that Tether is legally bound and technologically capable of transferring the frozen USDT. Specifically, the motion asks the court to compel Tether to empty two IRGC-linked USDT addresses and reissue the equivalent amount to a designated plaintiff wallet. This move aims to facilitate the recovery of funds related to U.S. court judgments totaling approximately $552.3 million in compensatory damages and $1.86 billion in punitive damages, awarded over the past two decades in various terrorism-related cases.
The plaintiffs’ argument rests on the assertion that Tether, by its operational capacity and its handling of previous U.S. law enforcement requests, is obligated to comply with court-ordered turnovers. The filing points to instances where Tether has frozen assets or transferred equivalent value in USDT in response to seizure warrants and court orders, including a case in the District of Columbia in November 2025 and another in Ohio in April 2025. These examples are presented to demonstrate Tether’s established practice of cooperating with U.S. authorities in freezing or redistributing crypto assets under specific legal directives.
Tether’s action to freeze the wallets in question occurred on April 24, coinciding with OFAC’s designation of these addresses on its Specially Designated Nationals (SDN) list. The plaintiffs argue that the U.S. District Court for the Southern District of New York can assert personal jurisdiction over Tether, a Salvadoran company, due to its significant reserve management and custodial operations being handled in New York through Cantor Fitzgerald. The legal strategy emphasizes that the current action targets specific Iranian property interests held by Tether, rather than attempting to seize the company’s own corporate assets.
Potential Regulatory Precedent
This legal maneuver could establish a significant precedent for how U.S. courts handle terrorism-related judgments involving digital assets. If successful, it would underscore the principle that cryptocurrency, even when held by non-U.S. entities, can be subject to U.S. jurisdiction and seizure orders to satisfy legal judgments. This could embolden other judgment creditors to pursue similar actions against stablecoin issuers and cryptocurrency exchanges. Furthermore, it highlights the increasing intersection of international sanctions, counter-terrorism enforcement, and blockchain technology, potentially influencing the development of global regulatory frameworks and compliance standards for digital asset custodians. Regulatory bodies worldwide, including those working under frameworks like the EU’s MiCA, will likely monitor such cases closely to assess the implications for asset recovery and jurisdictional authority in the digital asset space.
Based on materials from : www.theblock.co