Terrorism Victims Seek Manhattan Court Order For Tether To Release $344M Frozen USDT Linked To IRGC

Terrorism victims and families with unpaid U.S. court judgments against Iran asked a Manhattan federal court to compel Tether to transfer more than $344 million in frozen USDT tied to two blocked Tron wallet addresses linked to Iran’s Islamic Revolutionary Guard Corps.

“Victims and families in terrorism cases have asked a Manhattan federal judge to order Tether to hand over more than $344 million in frozen USDT”

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The motion was filed in the U.S. District Court for the Southern District of New York against Tether International S.A. de C.V., and it seeks an order requiring Tether to turn over property in its control belonging to Iran, its agencies, instrumentalities, or controlled entities, including the Islamic Revolutionary Guard Corps.

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The plaintiffs say they have collectively won judgments worth $552.3 million in compensatory damages and $1.86 billion in punitive damages, but Iran has paid nothing toward those awards.

They argue the wallets were blocked after being connected to the IRGC and that, because U.S. authorities already labeled the wallets as belonging to a sanctioned group, the assets inside are considered blocked property under U.S. law.

The filing centers on Tether’s issuer-level structure for USDT, which the plaintiffs say includes the ability to freeze wallets, block transactions, and reissue tokens when required by law enforcement or sanctions rules.

The plaintiffs’ request is framed around New York turnover law and federal terrorism-enforcement statutes, with the motion arguing that Tether has both the technical capability and legal obligation to zero out the balances held in the blocked wallets and reissue an equivalent amount of USDT to a wallet controlled by the judgment creditors.

In the filing, attorney Charles Gerstein argues that “Tether is required to turn over any property of a judgment debtor that it is capable of turning over,” and the motion cites Tether’s prior law-enforcement actions as evidence of operational control.

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FinanceFeeds says the motion points to a November 2025 seizure case in Washington, DC, where Tether transferred seized USDT to the U.S. government after receiving an FBI warrant, and it also references an Ohio case from April 2025 where Tether burned tokens and reissued 4.34 million USDT to a law enforcement-controlled wallet.

The plaintiffs also contend the Manhattan court has personal jurisdiction over Tether because much of the company’s reserves are custodied and managed in New York through Cantor Fitzgerald.

The case remains pending, with the filing asking the court to reduce the frozen wallet balances to zero and create an equal amount of USDT in a wallet chosen by the victims’ legal team.

The motion ties the frozen USDT to OFAC-blocked Tron wallet addresses linked to Iran’s Islamic Revolutionary Guard Corps and seeks to use those issuer-controlled stablecoin mechanics to satisfy terrorism-related judgments.

Among the plaintiffs identified in the coverage are victims and families of the 1997 Hamas suicide bombing in Jerusalem, and the filings describe the group as holding billions of dollars in unpaid U.S. court awards against Iran.

The plaintiffs say the request targets Iranian property interests in Tether’s custody rather than Tether’s own corporate assets, and they argue that OFAC’s designation makes the frozen USDT “blocked property” of a terrorist entity subject to execution under federal law.

The outcome could shape how courts treat issuer-frozen stablecoins in terrorism enforcement cases, because the motion asks whether frozen assets can be redirected to private judgment creditors rather than merely immobilized.

As of the filing described in the sources, no judicial determination has been rendered and both sides are waiting for the judge’s ruling in the Southern District of New York.