Two Thai businessmen sued Tether on Aug. 31 in the U.S. District Court for the Southern District of New York, challenging the issuer’s authority to freeze approximately 42.4 million USDT before authorities secured a seizure warrant.

Nutthawat Rukthammachalern and Natthawat Kasamvilas allege in their complaint that Tether blacklisted ten Ethereum addresses containing precisely 42,417,785.62 USDT on Oct. 30, 2025. The allegations have not been adjudicated, and Tether had not filed a public response as of Sept. 2.

Tether allegedly acted before obtaining legal process

The plaintiffs claim Tether acted after receiving an informal request from a Homeland Security Investigations agent. They contend no warrant, court order, subpoena or other formal legal process authorized the initial freeze.

Kasamvilas discovered the restriction after attempting a transaction, according to the filing. When he contacted Tether, the company allegedly referred him to an HSI agent’s email address without explaining its legal basis for blocking the funds.

The complaint says Tether used the addBlackList function within its Ethereum smart contract. This prevents tokens at designated addresses from moving. Another function, destroyBlackFunds, allows Tether to burn blacklisted USDT.

The plaintiffs say they acquired the tokens through secondary-market business transactions and had no direct customer relationship with Tether. They argue that possessing technical control over the smart contract does not automatically give Tether legal authority over tokens held by third parties.

A later warrant targeted tokens linked to alleged fraud

On Feb. 19, 2026, a magistrate judge in the Eastern District of North Carolina issued seizure warrant 5:26-MJ-1267-JG. According to the New York complaint, the warrant described a process under which Tether would burn USDT at the identified addresses, mint an equivalent amount and transfer the replacement tokens to a government-controlled wallet.

Five days later, federal prosecutors announced the seizure of more than $61 million in USDT. Investigators alleged that the targeted wallets received proceeds from cryptocurrency investment scams commonly called pig-butchering schemes.

HSI reportedly opened the investigation after receiving a victim’s tip. Investigators traced funds through multiple wallets that authorities said were used to obscure the money’s source, ownership and connection to fake trading platforms.

The Justice Department thanked Tether for assisting with the asset transfer. Tether separately confirmed its involvement in the broader $61 million operation.

However, the new complaint says the plaintiffs’ specific 42.4 million USDT remained frozen when the case was filed. It seeks to prevent Tether from burning those tokens. The available records therefore do not establish that the disputed tokens had already been transferred to the government wallet.

Tether lawsuit tests stablecoin issuers’ freezing powers

The plaintiffs do not merely challenge the government’s tracing allegations. Their case focuses on whether a private stablecoin issuer may restrict secondary-market tokens after an informal law-enforcement request and before receiving judicial authorization.

They also argue the February warrant could not retroactively validate Tether’s October action. The complaint further disputes whether a seizure warrant permits burning the named property and replacing it with newly minted tokens before a final forfeiture judgment.

The claims include conversion, trespass to chattels, unjust enrichment and requests for declaratory and injunctive relief. The businessmen want Tether ordered to remove the blacklist, pay damages if the tokens are destroyed and surrender income allegedly earned from reserves supporting the frozen USDT.

Tether’s law-enforcement powers operate at a considerable scale. As crypto.news previously reported, the company froze $514 million across 370 addresses during one 30-day period in 2026. Its 2025 blacklist covered 4,163 Ethereum and Tron addresses, according to BlockSec data cited in that report.

The next procedural step will be service of the complaint and Tether’s response. The court could also consider an early injunction request if the plaintiffs seek immediate protection against burning or reissuing the disputed tokens.

Separately, the plaintiffs told the New York court that they filed an application in North Carolina on July 31 seeking the return of the USDT. Neither proceeding has produced a judgment on ownership, forfeiture or Tether’s liability.

A consortium of 21 major financial institutions says it will form a dedicated company to develop and issue regulated stablecoins, signaling another push by traditional banks and asset managers toward dollar-denominated digital money.

The group, announced Tuesday, includes Bank of America, Goldman Sachs, Citi, Deutsche Bank, UBS, Santander, MUFG and Fidelity Investments. The consortium’s stated goal is to launch a US dollar stablecoin in the first half of 2027, contingent on forming the company and satisfying other conditions.

Key takeaways

• The consortium’s planned launch of a US dollar stablecoin is targeted for the first half of 2027, subject to corporate formation and other requirements.
• After the initial dollar product, the group intends to expand into other G7-denominated stablecoins, with a euro coin identified as the next priority.
• The stablecoin design is positioned for compliance with the US GENIUS Act and, where applicable, the EU’s MiCA framework.
• The membership has more than doubled since an earlier October initiative involving 10 banks exploring a reserve-backed model.
• Broader institutional momentum is building across regions, including examples from Singapore’s regulatory discussions and multiple launches by established firms.

A wider coalition builds toward regulated stablecoins

According to the consortium’s announcement, the new venture is expected to address wholesale, institutional and retail use cases. Proposed applications include cross-border payments and digital asset settlement—areas where stablecoins can potentially reduce friction compared with legacy settlement workflows.

The group also emphasized regulatory alignment. Its initiative is intended to comply with both the US GENIUS Act and the European Union’s Markets in Crypto-Assets Regulation (MiCA), where applicable. That matters for market participants because stablecoin issuance, distribution, and reserve management typically face heightened scrutiny once products move from pilots into mainstream financial rails.

In addition, the consortium says it plans to broaden beyond a single denomination. After the dollar release, it sees a euro stablecoin as the next major step—an approach that reflects both currency demand and the regulatory expectations different regions may impose.

From a 10-bank probe to 21 institutions

The initiative expands on an earlier effort announced last October. At the time, an initial group of 10 banks said they were exploring a 1:1 reserve-backed form of digital money available on public blockchains. By Tuesday, the consortium’s membership had more than doubled, bringing together institutions spanning North America, Europe, East Asia, the Middle East and Africa.

That expansion suggests the stablecoin conversation has shifted from individual exploration to coordinated planning—often a prerequisite for building shared standards, clarifying reserve and issuance mechanics, and navigating cross-border legal requirements.

While the consortium has not detailed issuance mechanics in the announcement excerpt provided, its stated timeline and compliance framing indicate it expects regulatory conditions to be central to execution rather than an afterthought.

Why GENIUS and MiCA matter for adoption

Stablecoin adoption has accelerated in recent years, and the consortium explicitly ties its strategy to clearer regulatory pathways. In the US, the GENIUS Act is referenced as a key driver for how a compliant stablecoin could be issued and used. In the EU, MiCA provides a framework that has influenced how market players structure offerings and disclosures.

For investors and builders, the practical difference between “stablecoin growth” and “regulated stablecoin issuance” is significant. Regulatory clarity can influence bank participation, custodial relationships, settlement partnerships, and the willingness of traditional payment networks to integrate stablecoin rails.

Even outside Europe and the US, regulators are actively shaping the boundaries. According to a separate Tuesday announcement from Singapore, the city-state is considering allowing jointly issued cross-border stablecoins into its regulatory regime, revisiting an earlier decision to restrict the framework to domestic issuance. That kind of evolution can be important for consortia, because cross-border stablecoin models often require coordination between jurisdictions.

Institutional momentum already shows the market’s pull

The consortium’s plan arrives amid broader signs of mainstream engagement. Earlier in 2025, a Fireblocks survey of 295 executives found that 90% of respondents were using or planning to use stablecoins. That kind of adoption intent can help explain why large financial firms are now looking beyond experimentation and toward structured issuance strategies.

Developments across the industry also illustrate how quickly participation has broadened. Societe Generale’s crypto subsidiary has issued euro- and dollar-denominated stablecoins, while Fidelity has launched its US dollar-pegged FIDD stablecoin. Meanwhile, Standard Chartered has backed a Hong Kong dollar stablecoin venture. These examples suggest that while the consortium targets a future launch, parts of the market have already moved into live offerings and distribution experiments.

There is also a competitive element to this landscape. As major firms test stablecoin use cases—from custody and settlement to payments—regulators and counterparties gain real-world evidence for how products should operate. In that context, the consortium’s emphasis on compliance with GENIUS and MiCA reads as both a risk-management decision and a roadmap for scaling.

What to watch next

For now, the key unknown is execution: the consortium’s ability to finalize corporate structure, meet regulatory requirements, and define reserve and issuance arrangements at launch will determine whether a first-half-2027 dollar stablecoin becomes a practical on-ramp for institutions—or remains a high-level plan. Investors and market participants should track how the group formalizes governance, how regulators interpret stablecoin rules in each jurisdiction, and whether euro expansion timelines follow quickly after the initial US dollar rollout.

Prediction market platform Kalshi says it has permanently barred two US political candidates from trading on its event contracts after compliance investigations found activity that Kalshi described as violating rules against insider influence. The actions follow a broader wave of scrutiny directed at prediction markets, including investigations tied to potential manipulation of politically sensitive markets.

In separate settlement notices announced Friday, Kalshi’s compliance team reported that it imposed a lifetime suspension and a $71,356 penalty on former Republican congressman George Santos, while Laurie Buckhout—also a Republican candidate—received a three-year trading suspension plus a $2,590 penalty. Both cases relate to contracts that Kalshi says could be influenced by the candidates’ own actions.

Key takeaways

• Kalshi reports it permanently suspended George Santos from trading on its prediction market platform and imposed a $71,356 penalty.
• Kalshi reports it suspended Laurie Buckhout for three years and imposed a $2,590 penalty.
• Both actions were tied to Kalshi findings that each person traded in markets connected to events in which they had decision-making influence, which Kalshi says its rules prohibit.
• The disciplinary steps come as prediction markets remain in the crosshairs of US state and federal regulators debating jurisdiction and market-manipulation risk.
• As of Tuesday, Kalshi still listed election-related event contracts tied to Buckhout’s North Carolina race.

Why Kalshi took action

Kalshi framed both settlements around a core compliance principle: its market rules prohibit trading by anyone who can influence the outcome of the underlying event tied to a contract. In the platform’s rules, Kalshi states that if a trader is a decision maker—or has any direct or indirect influence, “no matter the scale and importance of the influence”—on the outcome of an underlying event, the trader is prohibited from entering trades on markets for those contracts.

According to Kalshi’s disclosures, Buckhout violated this restriction by trading around event contracts connected to her own political race. Kalshi said Buckhout announced her candidacy in North Carolina’s 1st congressional district and that she was subsequently added as an option for a contract tied to the outcome of the congressional election.

For Santos, Kalshi said its investigation found he engaged in trading activity in certain markets related to his attendance at the State of the Union address in February 2026—again, a scenario Kalshi characterized as falling under its prohibition on trading when the trader can influence the underlying event.

Penalties, suspensions, and what Kalshi said about cooperation

Kalshi’s compliance department reported the settlements in two documents published with its regulatory notices. For Santos, Kalshi said the disciplinary action took the form of a permanent suspension from trading on Kalshi markets, accompanied by a $71,356 penalty. For Buckhout, Kalshi reported a three-year suspension and a $2,590 penalty.

Kalshi’s notices also included differing language about cooperation. In Buckhout’s case, Kalshi stated that she “cooperated with the inquiry” and agreed to the three-year trading ban and penalty. In Santos’ case, Kalshi did not similarly state that he cooperated with its investigation, leaving an important procedural detail unaddressed in the company’s public notice.

These measures are notable because they represent one of the first lifetime bans Kalshi has imposed since the platform’s launch in 2021, according to the article’s framing. For participants who trade on event contracts, the message from Kalshi’s compliance team is that the company intends to treat “influence” broadly—especially when the underlying event is tied to a person’s public role or political activity.

Prediction markets face escalating political and regulatory scrutiny

The Kalshi actions arrive at a moment when prediction market platforms are under intensified review from both state and federal lawmakers. The underlying concern is not simply whether markets are speculative, but whether certain contracts are vulnerable to manipulation when insiders can affect outcomes.

Earlier this year, the issue was highlighted by federal action involving Kalshi-tied event contracts. According to the article, President Donald Trump’s teleprompter operator, Gabriel Perez, was fined $172,000 by US regulators after trading event contracts on Kalshi related to Trump’s speeches. That case underscores how regulatory attention can focus on politically linked markets—particularly where traders may have privileged access or ability to impact the event that drives settlement.

More broadly, Kalshi and other prediction market platforms—including Polymarket—have faced lawsuits brought by individual state gaming authorities alleging that the platforms facilitate illegal betting on sporting events. At the same time, the chair of the US Commodity Futures Trading Commission (CFTC), Michael Selig, has argued that the CFTC has “exclusive jurisdiction” over prediction markets and has said the agency will take legal action against states that challenge that position.

Last month, the CFTC invoked emergency authority in response to New York’s attempt to block Kalshi from offering contracts tied to sports, elections, and other events, according to the cited coverage. This ongoing jurisdictional dispute is part of the larger fight over how US regulators classify prediction markets and who has the authority to regulate them.

Where the candidates stand after the settlement

Kalshi’s sanctions are tied to trading behavior, but they also intersect with ongoing political campaigns. The notices indicate Buckhout remains a Republican candidate for North Carolina’s 1st congressional district in the 2026 midterm elections, while Santos was previously expelled from Congress in December 2023 amid fraud allegations.

After Kalshi’s settlement was announced, Santos said on X that Kalshi was an “unserious company.” Buckhout, according to reported comments, characterized her actions as a “dumb mistake.” While those reactions provide political context, what matters for traders and users is Kalshi’s clear enforcement of its own rules against trading while influencing underlying event outcomes.

Importantly for market participants, Kalshi still lists event contracts tied to the outcome of Buckhout’s North Carolina race. As of Tuesday, the platform reportedly showed Democratic incumbent Don Davis at a 63% chance versus Buckhout at 41%—meaning the settlement does not appear to have removed the election market itself, only restricted Buckhout’s trading access.

Readers should watch how Kalshi continues to handle conflicts of interest in politically linked contracts, and whether regulators—especially the CFTC—treat these enforcement actions as evidence that prediction markets need stronger compliance guardrails or as support for the company’s broader regulatory stance. The next signals to monitor are additional disciplinary notices and any new court activity that could reshape how prediction markets are governed in the US.