Terror Attack Victims Seek Court Order to Seize $344 Million in Tether-Frozen USDT Linked to Iranian Military

Court Motion Targets OFAC-Blocked Wallets

A group of U.S. terrorism judgment creditors has filed a motion in Manhattan federal court requesting that Tether be compelled to transfer more than $344 million in frozen USDT from wallet addresses linked to Iran's Islamic Revolutionary Guard Corps (IRGC). The motion was submitted Thursday to the U.S. District Court for the Southern District of New York.

The plaintiffs hold unpaid judgments against Iran stemming from terrorism-related cases and are seeking to enforce approximately $2.42 billion in total judgments. This figure comprises roughly $552.3 million in compensatory damages and $1.86 billion in punitive damages awarded across multiple U.S. court cases over the past two decades.

Proposed Technical Solution

The court filing argues that Tether possesses both the technological capability and legal obligation to zero out the balances in two IRGC-linked addresses and reissue an equivalent amount of new USDT to a wallet designated by the victims. The motion relies on New York turnover law and federal terrorism-enforcement statutes as its legal foundation.

According to the filing, the targeted wallets hold precisely 344,149,759 USDT and have been frozen by Tether since April 24, the same date the Office of Foreign Assets Control (OFAC) added these addresses to its Specially Designated Nationals list.

Precedent Cases Cited

The plaintiffs' legal team referenced multiple instances where Tether has previously complied with U.S. law enforcement requests to transfer frozen digital assets. The motion specifically cites a November 2025 seizure case in the District of Columbia, where the FBI provided Tether with a seizure warrant on or about March 19, 2025, and the company subsequently transferred the equivalent USDT amount to the United States government.

Additionally, the filing points to an Ohio case from April 25, 2025, in which Tether "burned" tokens from a targeted address and reissued 4,340,000 USDT to a law enforcement-controlled wallet.

"Tether is required to turn over any property of a judgment debtor that it is capable of turning over, and Tether is concededly and obviously capable of turning over USDT because it has done exactly that in response to many U.S. seizure orders," the filing states.

Jurisdictional Arguments

The plaintiffs assert that the Manhattan federal court may exercise personal jurisdiction over Tether, despite the company being based in El Salvador. This argument centers on the fact that Tether's reserves are largely custodied and managed in New York through Cantor Fitzgerald.

The filing emphasizes an important distinction: the legal action targets the turnover of specific Iranian property interests currently in Tether's custody, rather than the stablecoin issuer's own corporate assets. This framing is designed to strengthen the jurisdictional claim and demonstrate that the company acts as a custodian of the disputed funds.

Background on Frozen Assets

The OFAC-blocked wallet addresses at the center of this case represent a significant test of how U.S. courts can enforce terrorism-related judgments against digital assets held by foreign entities with U.S. operational ties. The case could establish important precedent for future attempts to seize cryptocurrency linked to sanctioned entities or individuals.

The motion represents one of the largest attempts to date by U.S. judgment creditors to access frozen cryptocurrency holdings as compensation for terrorism-related damages. The outcome could have significant implications for how stablecoin issuers respond to court orders involving sanctioned addresses.