US Terrorism Judgment Creditors Ask Manhattan Court to Compel Tether to Transfer 344M USDT From OFAC-Blocked Tron Wallets

Court Filing Seeks Turnover of Frozen USDT

Creditors holding unpaid U.S. terrorism-related judgments against Iran have asked a federal court in Manhattan to order Tether to turn over 344,149,759 USDT. The request targets funds held in two OFAC-blocked wallets on the Tron blockchain that are tied to Iran’s Islamic Revolutionary Guard Corps (IRGC).

According to the motion, the plaintiffs want the court to require Tether to reduce the blocked wallet balances to zero and reissue an equivalent amount of USDT to a wallet designated by the plaintiffs’ attorneys. The creditors are seeking to enforce judgments connected to attacks attributed to Iran-backed groups.

Argument Centers on Issuer Control Over USDT

The filing emphasizes that USDT differs from decentralized cryptocurrencies such as Bitcoin and Ether because it includes issuer-level controls. Those controls allow Tether to block specific addresses and prevent tokens from moving when responding to sanctions designations or law enforcement actions.

The plaintiffs argue that these controls mean Tether has the technical capability to comply with a turnover order. The filing points to prior instances in which Tether has frozen and reissued USDT in connection with law enforcement matters. In the creditors’ view, that history demonstrates Tether can act on the blocked balances now at issue.

The motion states that “Tether is required to turn over any property of a judgment debtor that it is capable of turning over,” framing the frozen stablecoin balances as property that can be delivered to satisfy the judgments.

OFAC Sanctions Triggered the Wallet Freeze

The disputed balances were frozen after the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Iran-linked crypto addresses on April 24. Following those sanctions, Tether froze roughly $344 million in USDT across two Tron addresses after U.S. authorities linked them to networks involving the IRGC and the Central Bank of Iran.

Blockchain intelligence firm TRM Labs reported that the two wallets had received approximately $370 million through nearly 1,000 transactions since March 2021. TRM Labs also said most of the funds became largely dormant after late 2023, a pattern it characterized as more consistent with reserve storage than ongoing transactional activity.

Enforcement Effort Tests Use of Frozen Stablecoins in US Judgments

The case raises a key legal question: whether issuer-frozen stablecoins can be compelled into service to satisfy unpaid terrorism judgments in U.S. courts. The motion seeks to apply New York turnover procedures and federal terrorism enforcement provisions to a stablecoin structure where the issuer can restrict transfers at the smart-contract or administrative level.

While the plaintiffs’ strategy focuses on Tether’s operational ability to freeze and reissue tokens, the court will need to determine whether Tether can be legally required to transfer the frozen USDT under the relevant rules.

Tether’s Freezing Activity Expands Across Multiple Networks

The court push comes as Tether’s role in freezing and restricting USDT has continued to grow. Reporting cited activity from the T3 Financial Crime Unit, a group backed by Tether, Tron, and TRM Labs, which has frozen more than $450 million in suspected illicit assets since launching in 2024.

Separate market updates also said Tether froze more than $514 million in USDT across 370 addresses in a recent 30-day period. In addition, BlockSec data cited in prior reporting placed Tether’s 2025 blacklist total at $1.26 billion across Ethereum and Tron.

Judge Must Still Decide Whether Transfer Can Be Compelled

The motion does not mean the plaintiffs have already recovered the assets. A judge must still rule on whether Tether can be compelled to move or reissue the frozen 344,149,759 USDT under New York turnover rules and federal laws governing the enforcement of terrorism-related judgments.

Until the court issues a decision, the tokens remain frozen in the OFAC-blocked Tron wallets cited in the filing.