Victims of Iran Attacks Seek Court Order for Turnover of $344 Million in USDT Frozen by Tether

TLDR:

• • Terrorism victims filed a Manhattan court motion targeting 344 million USDT frozen in IRGC-linked wallets.
  • Plaintiffs cite past FBI seizure cases where Tether burned and reissued USDT to law enforcement wallets.
  • Creditors seek to enforce $2.42 billion in compensatory and punitive terrorism judgments against Iran.
  • Jurisdiction over Tether rests on its New York-based reserves managed through Cantor Fitzgerald.

U.S. terrorism judgment creditors filed a motion in Manhattan federal court Thursday, seeking the turnover of over $344 million in USDT.

The frozen funds are held in OFAC-blocked wallet addresses linked to Iran’s Islamic Revolutionary Guard Corps. The plaintiffs want Tether to zero out those balances and reissue equivalent tokens to them.

The case could set a notable precedent for crypto asset enforcement in terrorism-related judgments.

Plaintiffs Target IRGC-Linked Wallets Frozen by Tether

The motion was filed in the U.S. District Court for the Southern District of New York. It targets 344,149,759 USDT held across two IRGC-linked wallet addresses.

Tether froze those wallets on April 24, the same day OFAC added them to its Specially Designated Nationals list. The timing of the freeze aligns directly with federal sanctions enforcement action.

The plaintiffs argue that Tether has both the technological capability and the legal obligation to act. The filing states, “Tether is required to turn over any property of a judgment debtor that it is capable of turning over.”

It further notes that “Tether is concededly and obviously capable of turning over USDT because it has done exactly that in response to many U.S. seizure orders.” Those prior actions now serve as direct evidence against the firm.

In November 2025, the FBI provided Tether with a seizure warrant in a District of Columbia case. Tether then transferred an equivalent USDT amount to the United States government.

A separate Ohio case from April 2025 saw Tether burn tokens and reissue 4,340,000 USDT to a law enforcement wallet. These precedents form the backbone of the plaintiffs’ legal argument.

The court is also asked to establish personal jurisdiction over Tether. The plaintiffs argue that Tether’s reserves are largely custodied and managed in New York through Cantor Fitzgerald.

Therefore, U.S. courts retain authority over the company despite its Salvadoran registration. The filing also clarifies that the action targets Iranian property interests, not Tether’s own corporate assets.

Creditors Push to Enforce $2.42 Billion in Terrorism Judgments

The plaintiffs are seeking to enforce judgments issued across multiple U.S. terrorism cases over the past two decades. Those judgments total roughly $552.3 million in compensatory damages and $1.86 billion in punitive damages.

Together, they amount to approximately $2.42 billion in outstanding court awards. The $344 million in USDT represents a portion of that total enforcement effort.

The filing draws a clear legal line between Tether’s role and Iran’s property interest. “The action targets the turnover of specific Iranian property interests in Tether’s custody rather than the firm’s own corporate assets,” the document states.

This distinction matters legally, as it narrows the scope of the turnover request considerably. Tether, as an intermediary holding frozen funds, cannot claim ownership as a defense.

The case now awaits a ruling from the Manhattan federal judge. If granted, the order would compel Tether to burn the IRGC-linked tokens and reissue them to a plaintiff-designated wallet.

Crypto legal experts will be watching the outcome closely. The decision could shape how U.S. courts approach frozen digital assets in terrorism enforcement cases going forward.

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