A new lawsuit against Tether in the Southern District of New York has sparked widespread debate in the crypto community, reigniting questions about accountability, transparency, and users’ rights in the stablecoin sector. Riverstone Consultancy, the plaintiff, accused Tether of freezing $44.72 million worth of USDT after receiving what it described as an “informal request” from Bulgarian police — a move that allegedly bypassed established legal procedures.
According to the complaint, Tether froze eight wallets on April 4 without providing a valid legal explanation or following international due process. Riverstone said it was instructed to contact Bulgarian authorities, who never responded, leaving the company unable to retrieve its assets. The firm further accused Tether of misleading users by promoting USDT as a liquid, decentralised, and transparent stablecoin while maintaining centralised control that allows it to seize or freeze funds at will.
Australian lawyer Bill Morgan described the lawsuit as “a clear example of unjust enrichment,” comparing it to exchanges that profit from users’ airdrops without redistributing them. Crypto analyst Jacob King, who first shared the case details online, noted that Riverstone’s claims centred on breach of trust, unfair profit, and unauthorised control of customer assets — all suggesting that Tether benefited financially while withholding funds.
Legal experts say the case highlights the uncertain legal framework surrounding crypto asset freezes. Bill Hughes, counsel at ConsenSys, explained that while traditional banks are bound by strict legal processes before freezing customer accounts, crypto companies often act on unofficial enforcement requests without oversight or recourse for affected users. This, he said, exposes a critical regulatory gap that puts holders of digital assets at risk of losing funds without due process.
However, the situation is complicated by new findings from blockchain investigator ZachXBT, who said that some of the frozen wallets were linked to fraudulent operations such as BETL and Pegasus Ride. He claimed that blockchain data clearly showed the funds’ ties to Ponzi-like schemes, suggesting that Riverstone’s assets may not have been entirely clean.
Meanwhile, Tether’s broader financial practices are also under renewed scrutiny after reports that it contributed nearly $300 million to help resolve the Celsius bankruptcy case. The development has added to concerns over the company’s control over its reserves and its opaque relationship with law enforcement.
Ultimately, the case underscores a growing tension between crime prevention and user protection in the crypto space. As governments and regulators tighten oversight, the absence of standardised legal protocols for stablecoin issuers like Tether continues to leave room for disputes over fairness, legality, and transparency.
