A group of victims holding unpaid U.S. terrorism judgments against Iran has filed a motion in a Manhattan federal court, seeking to compel Tether to turn over approximately $344 million in frozen USDT. The funds sit in two Tron blockchain wallets that were blocked earlier this year by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) for links to Iran’s Islamic Revolutionary Guard Corps (IRGC).
The motion, filed Thursday in the U.S. District Court for the Southern District of New York, asks that Tether reduce the balances of the two wallets to zero and issue the same amount of USDT to a wallet controlled by the plaintiffs’ legal team. The plaintiffs—survivors and family members of victims from Iran-linked terror attacks, including a Jerusalem family who lost relatives in a 1997 Hamas suicide bombing—hold court judgments against Iran that have never been paid.
Attorney Charles Gerstein, representing the creditors, argues that Tether has the technical ability to comply because of its centralized control over USDT. Unlike Bitcoin or Ether, USDT is issued and managed by a single company that can freeze addresses, block transactions, and reissue tokens when responding to law enforcement orders or sanctions. The filing states, “Tether is required to turn over any property of a judgment debtor that it is capable of turning over.” The motion emphasizes that OFAC already identified the wallets as IRGC-controlled assets, which clears a path for seizure under U.S. terrorism statutes.
The wallets in question were frozen after OFAC sanctioned Iran-linked crypto addresses on April 24. Blockchain intelligence firm TRM Labs noted that the two wallets received about $370 million across nearly 1,000 transactions since March 2021, with most funds sitting dormant after late 2023—a pattern it described as reserve storage rather than active use.
This legal push is part of a broader campaign by Gerstein, who has also filed similar cases involving North Korea-linked cyber operations against Arbitrum and a privacy-focused protocol called Railgun DAO. The motion does not guarantee the plaintiffs will receive the funds; a judge must still decide whether Tether can be compelled under New York turnover rules and federal terrorism enforcement laws. If successful, the case could set a significant precedent for how courts treat centralized stablecoin issuers and their frozen assets.
