In April, stablecoin issuer Tether froze $44.7 million in USDT at the request of Bulgarian police.
Now, a company is suing to get it back.
Riverstone Consultancy Inc. a firm based in Houston, Texas, has accused Tether of illegally freezing the tokens. Riverstone has missed out on unnamed investment opportunities as a result, according to the lawsuit.
The lawsuit casts a spotlight on an issue facing centralized stablecoin issuers: how quickly should they honour law enforcement requests when crypto transactions settle near-instantaneously?
Move too slowly, and bad actors can make off with vast sums of money. Crypto transactions are irreversible, making it hard to retrieve stolen tokens.
Move too quickly, however, and legitimate actors can find their assets tied away improperly in the event law enforcement errs.
Tether’s eponymous stablecoin is the world’s largest, with tokens worth more than $180 billion in circulation.
While the dollar-pegged token has proven popular with cybercriminals, Tether has touted its eager cooperation with law enforcement. As of September 15, the company had frozen more than $3.2 billion in USDT, according to a company news release.
On April 4, Tether froze $44.72 million USDT spread across eight offline crypto wallets Riverstone controls, according to the lawsuit, filed Monday in the Southern District of New York.
The Texas company contends Tether did so “improperly and unreasonably” at the request of a local police department in Bulgaria.
“Tether did not follow the proper procedures to freeze the assets in the Wallets,” the lawsuit reads.
“Under Bulgarian treaties with foreign countries … any request of seizing or freezing assets in a foreign country should go through particular procedures requiring exchange and file information between Bulgarian central authority and the foreign affairs liaison.”
When Riverstone contacted Tether, it was directed to the police department, which ignored Riverstone’s inquiries, according to the lawsuit.
Tether did not respond to DL News’ request for comment.
Riverstone controls the…
..
