In a new lawsuit filed in the US Federal Court for the Southern District of New York, it was requested that $ 344 million USDT frozen by Tether be transferred to the victims. This request was submitted in order to fulfill final compensation decisions regarding Iran-related terrorist attacks. Charles Gerstein, the lawyer handling the case, stands out as one of the names trying to collect compensation that has not been paid for decades through the cryptocurrency transfer infrastructure.
Tether and US Sanctions
Tether is known as the company that issues USDT, one of the world’s largest stablecoins. After the company linked two Tron wallets on the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions list to the Iranian Revolutionary Guard Corps, it blocked access to 344,149,759 USDT in these addresses. The plaintiffs ask the court to transfer this amount from the frozen addresses to a new wallet managed by their lawyers.
Among the creditors in the case file are the victims and their relatives of the suicide attack carried out by Hamas in Jerusalem in 1997. These people had obtained compensation decisions amounting to billions of dollars in US courts due to terrorist attacks supported by Iran. However, a significant part of the decisions cannot be collected for a long time.
USDT’s Technical Controls and Judicial Process
Unlike decentralized cryptocurrencies such as Bitcoin and Ethereum, Tether management has various administrative powers over USDT. In this way, the company can freeze suspicious wallets, blacklist addresses and, if desired, reset the balances and send new tokens to another address. The file argues that this authority has already been used within the scope of compliance with OFAC’s sanctions, and now funds can be transferred in favor of US victims.
In the documents submitted on the subject, Gerstein states that the legal dimension of the incident is clearer compared to the North Korea-related Arbitrum case. It was controversial who owned the ownership of some crypto assets obtained in the attack linked to North Korea’s Lazarus Group. However, in this case, it is reported that OFAC clearly linked Tron wallets to the Iranian Revolutionary Guard and that the relevant assets could be considered part of state-sponsored terrorism.
Main Opinions Submitted to the Court
The plaintiff claims that, under current US law, sanctioned assets used in the financing of state-sponsored terrorism can be transferred to victims through the court. In the submitted applications, “Tether’s systems are technically suitable to transfer frozen USDT to victims.” The statement draws attention to the authority and control of the company.
“If the crypto infrastructure can freeze sanctioned digital assets, courts can issue orders that ensure the transfer of these assets to victims,” Gerstein’s filing states. It seems that the approach is defended.
The incident is one of the important precedent cases regarding the legal and technical control capacity of cryptocurrencies in the USA. The practical limits of both the technical infrastructure and court decisions are open to discussion.
