How To Freeze Stablecoin? This Tether Lawsuit May Be Case In Point
The post How To Freeze Stablecoin? This Tether Lawsuit May Be Case In Point appeared on BitcoinEthereumNews.com.
A lawsuit filed against Tether in the Southern District of New York raised questions about how stablecoin issuers responded to law enforcement requests and exercised control over user funds. As Consensys lawyer Bill Hughes shared on October 15, Riverstone claimed Tether froze eight of its wallets containing $45 million on April 4, after receiving an informal request from a Bulgarian police department. The company alleged Tether failed to provide legal documentation justifying the freeze and directed Riverstone to contact Bulgarian authorities, who did not respond. The plaintiff alleged that Tether falsely marketed USDT as a reliable and liquid stablecoin while maintaining centralized control through smart contracts, which allowed for wallet freezing and address blacklisting. Riverstone stated that Tether advertised USDT as fast, stable, and free from banking delays, while exercising unilateral control that is inconsistent with these claims. The firm also asserted that Tether violated international legal protocols by freezing assets based solely on a local Bulgarian police request without proper judicial or diplomatic process. The complaint claimed Tether failed to act in good faith or provide due process before restricting access to funds. Three Legal Claims Targeted Tether The lawsuit included three causes of action against Tether. The first alleged breach of fiduciary duty involved Tether’s alleged obligations as issuer and custodian of USDT, including safeguarding assets, ensuring liquidity, and maintaining the transferability of USDT. The second claim asserted unjust enrichment by alleging Tether profited from reserve interest while denying Riverstone access to its assets during the freeze period. The third cause of action claimed conversion, stating that Tether exercised unauthorized control over Riverstone’s property by freezing wallets and restricting fund transfers. A Bulgarian law firm published an article describing how to unfreeze Tether addresses after the company responded to informal requests. The firm stated that Chinese authorities have…
