Arbitrum Case Lawyer Moves to Seize $344M From Tether

TLDR

• Attorney Charles Gerstein asked a Manhattan federal judge to order Tether to transfer $344 million in frozen USDT.
• The plaintiffs hold unpaid U.S. terrorism judgments linked to Iranian-backed attacks.
• OFAC designated two Tron wallet addresses as connected to Iran’s Islamic Revolutionary Guard Corps.
• Tether froze 344,149,759 USDT held at the sanctioned wallet addresses.
• The plaintiffs want Tether to reissue the frozen tokens to a wallet controlled by their counsel.

Victims holding U.S. terrorism judgments have asked a Manhattan federal judge to order Tether to transfer $344 million in frozen USDT. The request targets tokens linked to wallets that OFAC designated as connected to Iran’s Islamic Revolutionary Guard Corps. Attorney Charles Gerstein filed the motion in the Southern District of New York on Thursday.

Tether Faces Court Push Over Frozen $344 Million in USDT

The plaintiffs seek control of 344,149,759 USDT that Tether froze after OFAC sanctions. They want the court to direct Tether to reissue the same amount to a wallet controlled by their counsel. Gerstein argues that Tether has already immobilized the tokens and can therefore transfer them.

He stated in the filing that Tether “has the technical ability to burn and reissue the blocked tokens.” He claims federal law allows victims to execute against blocked property of a state sponsor of terrorism. The plaintiffs include families tied to the 1997 Hamas bombing in Jerusalem.

They hold billions of dollars in unpaid U.S. court judgments against Iran. However, they have struggled to collect on those awards for decades. Gerstein now seeks to use crypto rails to enforce those rulings.

USDT differs from Bitcoin and Ether because Tether can freeze or blacklist addresses. The company can also zero balances and reissue tokens under certain controls. Therefore, the plaintiffs argue that the court can compel a transfer.

OFAC designated two Tron wallet addresses as linked to the IRGC. Tether then froze the tokens held at those addresses. The plaintiffs argue that this action confirms the assets qualify as blocked property.

Strategy Expands Beyond Arbitrum to Target Crypto Control Points

Gerstein previously pursued frozen crypto in a North Korea-linked dispute on Arbitrum. That case involved funds tied to the KelpDAO hack and restaked ether. He argued that Lazarus-linked hackers briefly controlled the exploited assets.

Aave challenged that claim and argued that the hackers never legally owned the stolen funds. The dispute raised questions over theft, fraud, and title transfer. As a result, the Arbitrum case remains contested.

In contrast, Gerstein describes the Tether case as more direct. OFAC has already designated the Tron wallets as IRGC property. He argues that this designation supports execution under federal terrorism laws.

He wrote that if crypto platforms can freeze sanctioned assets, courts can order their transfer to creditors. The filing frames Tether as a controllable intermediary within the digital asset system. The court has not yet ruled on the request.

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