Treasury's $344M Iran crypto seizure now claimed by terrorism victims
Treasury's $344M Iran crypto seizure now claimed by terrorism victims
Pooja RajkumariFri, May 15, 2026 at 9:56 PM UTC
0
Treasury's $344M Iran crypto seizure now claimed by terrorism victims
A group of American terrorism victims has asked a Manhattan federal judge to compel Tether, the issuer of the USDT stablecoin, to transfer more than $344 million in frozen stablecoins directly to their attorneys.
Gerstein Harrow LLP and co-counsel Robert Tolchin of the Berkman Law Office LLC filed the motion on May 14 in the U.S. District Court for the Southern District of New York.
The plaintiffs are families connected to the 1997 Hamas bombing in Jerusalem, who hold unpaid U.S. court judgments against Iran totaling $552.3 million in compensatory damages and $1.86 billion in punitive damages, issued across multiple terrorism-related cases over the past two decades.
Related: Popular Dubai crypto event cancelled due to Iran war, offers refunds
How the frozen USDT got here
The freeze was part of "Operation Economic Fury," the Trump administration's broader campaign to squeeze Iran's economy by cutting off its ability to move money internationally.
Treasury Secretary Scott Bessent announced the action on April 24, saying: "We will follow the money that Tehran is desperately attempting to move outside of the country and target all financial lifelines tied to the regime."
As part of the operation, the Treasury's Office of Foreign Assets Control (OFAC) its designation of the Central Bank of Iran, adding two Tron blockchain wallet addresses to the Specially Designated Nationals (SDN) list. OFAC determined the wallets belonged to the Islamic Revolutionary Guard Corps-Qods Force and had ties to Hezbollah.
Advertisement
One wallet held approximately $213 million in USDT. The other held $131 million. Chainalysis identified on-chain patterns consistent with known IRGC wallets. Tether froze both balances the same day by blacklisting the addresses at the smart contract level. The plaintiffs served restraining notices on Tether three days later.
More of TheStreet Roundtable: -
Jane Street is moving away from Strategy
Mysterious trader buys $80 million ahead of Trump's return from China
Cathie Wood buys popular crypto stock despite revenue miss
The mechanism
What makes this case technically and legally interesting is how the proposed transfer would actually work.
The filing asks the court to order Tether to zero out the USDT balance at the two sanctioned wallet addresses and reissue an equivalent amount, 344,149,759 USDT, to a wallet controlled by the plaintiffs' counsel.
This is only possible because of how USDT works. Unlike Bitcoin or Ethereum, which cannot be unilaterally altered by any central issuer, USDT includes administrative controls that allow Tether to freeze wallets, blacklist addresses, and in some cases zero out balances and reissue tokens elsewhere.
Gerstein Harrow's filing argues that because Tether already demonstrated it can immobilize the funds, it is fully capable of redirecting them to judgment creditors.
Related: Iran, Cuba and Belarus Embrace Bitcoin. What Should Banks Do About Sanctions?
This story was originally published by TheStreet on May 15, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
Source: “AOL Money”
