Lawyers Seek $344M in Frozen USDt From Tether

Gerstein Harrow LLP filed a motion Thursday asking a court to compel Tether to turn over more than $344 million in USDt that U.S. authorities froze over links to Iranian entities. The firm says the frozen stablecoins should be used to satisfy civil judgments its clients hold against Iran and related parties.

The filing states plaintiffs are owed more than $532 million in compensatory damages and over $1.8 billion in punitive damages for acts of terrorism they allege were committed or sponsored by Iran over the past 25 years. The motion is part of a broader miscellaneous enforcement lawsuit that seeks to marshal and redistribute digital assets tied to investigations and sanctions involving Iran and North Korea.

In April, the U.S. Office of Foreign Assets Control ordered Tether to freeze about $344 million in USDt linked to Iranian entities. Gerstein Harrow’s motion asks the court to compel Tether to hand those frozen tokens to the plaintiffs. The firm’s filing does not specify how it would distribute the funds if the court grants the request. Tether has not issued a public comment on the motion.

In May the firm filed a restraining notice against the Kelp decentralized autonomous organization to block movement of Ether tied to a $293 million exploit in April. Onchain researcher ZachXBT has traced prior claims by Gerstein Harrow to assets connected with incidents involving the Harmony protocol and the Bybit exchange.

In a May 1 post on X, ZachXBT called the firm “a predatory US law firm with a strategy that is pure evil,” and said the firm used his public research to support its claims.

The case raises questions about competing legal claims to tokens frozen at the direction of U.S. authorities, including claims by victims of cyberthefts, civil judgment creditors and sanctions enforcement. Some market participants have said diverting frozen assets to satisfy older, unrelated judgments could affect efforts to return funds to recent hack victims and complicate coordination with law enforcement.

Courts and regulators have increasingly been asked to decide how to distribute cryptocurrencies seized or frozen under sanctions or forfeiture orders. Legal rulings in these cases will affect how similar disputes over frozen digital assets are resolved in the future.