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. The filing, submitted Thursday in the Southern District of New York, targets stablecoins blocked after OFAC linked two Tron wallet addresses to Iran’s Islamic Revolutionary Guard Corps. The plaintiffs want Tether to freeze the tokens and reissue an equal amount to a wallet controlled by their counsel.
The judgment creditors say they hold billions of dollars in unpaid U.S. court awards tied to Iranian-backed terrorism. Their claims include long-running efforts to recover court awards against Iran. Among them are victims and families of the 1997 Hamas suicide bombing in Jerusalem.
Attorney Charles Gerstein filed the request as part of a broader effort to collect old terrorism judgments through crypto rails. The filing seeks 344,149,759 USDT held at the blocked addresses. Tether froze the funds after the sanctions designation.
USDT differs from Bitcoin and Ether as Tether can freeze wallets and blacklist addresses.
In some cases, the company can also zero out balances and reissue tokens elsewhere.
That control sits at the center of the dispute.
Gerstein’s filing argues that Tether immobilized the funds in response to OFAC’s action. From that view, the company can also transfer the same value to judgment creditors. The plaintiffs say the blocked wallets already contain property tied to a sanctioned entity.
The filing also points to federal law. The plaintiffs argue that the OFAC designation makes the frozen USDT blocked property of a state sponsor of terrorism. They say that status opens the door to the execution of the assets.
This case extends a legal strategy Gerstein has used in other crypto disputes.
He has already pursued frozen funds in the North Korea-linked Arbitrum fight tied to the KelpDAO hack. He also filed separate litigation against the privacy protocol Railgun DAO.
In those cases, Gerstein targeted platforms that can freeze, control, or redirect digital assets.
He argued that such systems may supply assets for unpaid judgments. The plaintiffs in the Tether case say their position is simpler.
They argue the ownership issue here is clearer than in the North Korea-linked Arbitrum case. There, the title to the funds remains disputed. Here, they say OFAC already identified the Tron wallets as linked to the IRGC.
Gerstein’s broader theory says crypto infrastructure can freeze sanctioned assets. From there, courts may decide that the same systems can transfer those assets to victims with enforceable judgments. The filing now asks the court to test that idea with Tether’s frozen USDT.
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The lawsuit calls for a Manhattan court to decide whether Tether can transfer more than $344 million in frozen USDT to terrorism judgment creditors. The filing centers on OFAC-sanctioned Tron wallets linked to the IRGC and could shape how courts treat issuer-controlled stablecoins in future sanctions cases.