Legal Dispute Over Tether’s Frozen USDT Funds
A lawsuit against Tether was filed in the Southern District of New York by Riverstone Consultancy. Riverstone claims Tether froze $44.72 million in USDT after an informal request from Bulgarian police. The case raises concerns about how stablecoin companies handle frozen funds and unofficial law enforcement requests.
Lawyer Bill Morgan called the case “an obvious example of unjust enrichment.” He compared it to exchanges that withhold airdrops from users. Crypto analyst Jacob King shared details of the lawsuit, which accuses Tether of profiting from frozen reserves while denying Riverstone access to its funds.
Allegations Made Against Tether
The complaint states Tether violated international legal protocols by freezing assets based on a local police request without formal due process. Riverstone said Tether froze eight wallets on April 4 but did not provide legal justification. Tether directed Riverstone to contact Bulgarian authorities, who never replied.
Riverstone also accused Tether of falsely marketing USDT as a liquid and reliable stablecoin. The firm claims Tether’s ability to freeze wallets contradicts its promise of unrestricted and transparent transactions.
The lawsuit lists three main accusations:
- Breach of trust
- Unfair profit
- Unauthorized control of funds
Each claim centers on Tether allegedly making money while blocking Riverstone from accessing its assets.
Industry Response and Broader Impact
Consensys lawyer Bill Hughes said the case highlights bigger issues about stablecoins and law enforcement. He noted that banks follow clear legal steps before freezing funds, but crypto firms lack such rules. This can leave users without access or protection.
Blockchain investigator ZachXBT said the frozen wallets were linked to Ponzi schemes like BETL and Pegasus Ride. He added that the blockchain activity showed clear suspicious behavior, stating, “There’s no way you ‘accidentally’ associate $44.7M with tainted addresses onchain.”
The Blockchain Recovery Investment Consortium (BRIC) noted that Tether paid $299.5 million to help settle the Celsius bankruptcy case. This has increased scrutiny on how Tether manages funds and handles major financial disputes.
The case highlights the challenge of balancing law enforcement demands with user rights in crypto. It also shows the need for clear global rules to prevent unfair fund freezes and protect legitimate users.
