Lawyer Targets Tether for $344 Million in OFAC Terrorism Victim Case
Attorney Charles Gerstein filed a federal motion on May 15 seeking a court order that would compel Tether to transfer $344 million in OFAC-frozen Tether (USDT) to victims of terrorism holding unpaid judgments. The funds are tied to Iran’s Islamic Revolutionary Guard Corps.
The case is the most direct legal challenge yet to force Tether to act on frozen reserves rather than simply hold them.
What the Motion Seeks
Gerstein’s filing, reported by CoinDesk, asks a federal judge to treat the frozen USDT as attachable property. The argument is that victims who already hold valid terrorism judgments should be able to collect from assets that the U.S.
Treasury’s Office of Foreign Assets Control has already designated as connected to sanctioned parties. The motion does not ask the court to unfreeze the assets for general circulation.
It asks that the assets move directly to creditors with existing legal claims.
Background
OFAC, the Treasury Department office responsible for administering and enforcing economic and trade sanctions, froze the USDT wallets in question after linking them to the Revolutionary Guard. Tether has a documented practice of cooperating with OFAC freeze requests, immobilizing tokens at the protocol level without destroying them.
Gerstein is the same attorney who pursued a legal battle over crypto assets frozen after the Arbitrum (ARB)-linked exploit, a case that tested whether blockchain-based assets held by third parties could be subject to judicial attachment proceedings under U.S. civil law.
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What It Means for Tether
A successful motion would set a precedent requiring Tether to actively transfer frozen assets on court order, not simply hold them indefinitely. Legal observers have argued that Tether’s freeze capability makes the company functionally a custodian of sanctioned funds, which could expose it to competing legal claims from judgment creditors.
Tether has not issued a public statement on this specific filing. The outcome could affect how other stablecoin issuers design freeze and compliance infrastructure going forward, as courts weigh whether immobilized on-chain assets are attachable under existing U.S. property law.
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