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Ahmed Barakat
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Attorney Charles Gerstein filed a motion in federal court in Manhattan on Thursday to compel it Tether transferred 344,149,759 USDT, approximately $344 million, frozen to two Tron wallet addresses designated by OFAC as belonging to the Islamic Revolutionary Guard Corps.
The plaintiffs are asking the Southern District of New York to compel Tether to release the closed wallets and return the equivalent amount of USDT to the wallet controlled by their counsel.
The decision is a direct extension of Gerstein’s previous cases that focused on money held in North Korea. A choice The case is different from the Railgun DAO.
Bearish symbol of stablecoin giving confidence. If the courts accept this theory, Tether’s suspended controls, designed to match sanctions, would be a target in any jurisdiction where borrowers have unpaid felony rewards.
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How Liability Theory Works Mechanically, and Why the Tether Freeze Function Is a Fulcrum
The process here is important to understand. Unlike bitcoin or ether, USDT includes controls at the output level: Tether can freeze wallets, blacklist addresses, zero out balance, and reissue tokens to a new destination address.
Gerstein is the reservation is opposed that because Tether has already compromised the funds in response to OFAC’s submission of two Tron addresses, the company has shown technical expertise and willingness to act on the matter.
The sequence of events goes like this. OFAC designated two Tron wallets as IRGC assets. Tether has suspended 344,149,759 USDT held there.
The plaintiffs, who have billions of dollars in unpaid US lawsuits related to Iran-backed terrorism, now argue that frozen USDT constitutes a frozen asset of a state sponsoring terrorism, making them subject to execution under federal law.
Asking isn’t stealing Tether reserves. It’s a court order forcing Tether to use the same authority it used before, targeting a different destination address.
That distinction is important in analysis. Tether is already disabled $4.2 billion in USDT across over 5,000 wallets linked to gangs and helping the DOJ seize more than $6 million in money linked to a Southeast Asian fraud scheme.
The critics argue that Tether isn’t being asked to do anything unprecedented, just sending the existing freeze back to creditors instead of giving up the money.
The rule being made here is that economic control of property is the same as possession, and possession makes it possible to judge debtors according to the proper laws.
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