Victims of Iran-sponsored terrorism are asking a federal judge in Manhattan to order Tether to return more than $344 million in frozen money. $USDTmarking attorney Charles Gerstein’s latest attempt to collect decades-old terrorism judgments via cryptographic rails.
The filing, submitted Thursday in the Southern District of New York, seeks to force Tether to transfer stablecoins it froze after OFAC designated two Tron wallet addresses as belonging to Iran’s Islamic Revolutionary Guard Corps.
The defendants, who hold billions of dollars in unpaid U.S. court judgments related to Iran-backed terrorism, are asking the court to order Tether to return $344,149,759 $USDT held at blocked addresses by freezing the tokens and reissuing an equivalent amount to a wallet controlled by their lawyer.
Judgment creditors include victims and families seeking long-overdue terrorism compensation from Iran, including survivors of the 1997 Hamas suicide bombing in Jerusalem.
Unlike Bitcoin or Ether, which generally cannot be changed unilaterally by a central issuer, $USDT Includes administrative controls that allow Tether to freeze wallets, blacklist addresses, and in some cases reset balances and reissue tokens elsewhere.
Gerstein’s filing argues that because Tether has already tied up the funds in response to OFAC sanctions, the company is fully capable of transferring them to judgment creditors.
This latest filing expands a legal strategy Gerstein has already deployed in the North Korea-related Arbitrum fight over frozen funds linked to the KelpDAO hack and in separate litigation against privacy protocol Railgun DAO, targeting crypto platforms that can freeze, control or redirect digital assets as potential sources to enforce his client’s unpaid judgments.
The legal framework is also clearer than in the North Korea-related Arbitrum case, where ownership of mining revenues remains contested.
In that dispute, Gerstein argued that ether was frozen after Lazarus-Linked Reinvested Ether (rsETH) – a tokenized version of yield ether – exploited North Korean ownership because hackers briefly controlled the assets. Aave countered that the stolen funds never legally became the property of the attackers, creating a complicated fight against theft, fraud and securities transfer.
Here the question of ownership is simpler. OFAC has already designated Tron wallets as belonging to the IRGC, which the plaintiffs claim makes them frozen. $USDT Blocked property of a state sponsor of terrorism and therefore subject to enforcement under federal law.
Gerstein’s broader theory becomes clearer: If crypto infrastructure can freeze sanctioned assets, courts could eventually rule that those same systems can be used to transfer them to victims holding enforceable judgments.
