US-Based Law Firm Files New Motion Demanding Redistribution of $344M in USDt

Law firm Gerstein Harrow LLP filed a new motion on Thursday in a miscellaneous enforcement lawsuit, asking the court to compel stablecoin company Tether to hand over more than $344 million in frozen USDt linked to Iranian entities.

The motion claims that the plaintiffs are owed more than $532 million in compensatory damages and more than $1.8 billion in punitive damages from acts of “terrorism committed or sponsored by Iran,” stretching back more than 25 years. 

The latest filing is part of a broader lawsuit against North Korea (DPRK) and Iran, attempting to claim and redistribute digital assets as compensation for victims of various and unrelated judgments tied to state-sponsored violence, drawing criticism from the crypto community.

The motion to claim $344 million in frozen stablecoins linked to Iranian entities. Source: PACER

In May, the law firm filed a restraining notice against the Kelp decentralized autonomous organization (DAO), which manages the liquid staking platform, attempting to block the transfer of frozen Ether ( ETH) tied to the $293 million Kelp exploit in April.

The law firm’s tactics have drawn condemnation from the crypto community, with critics arguing that distributing funds owed to hack victims to satisfy unrelated judgments stretching back decades delays repayment for hack victims, who have a greater claim to the funds.

Related: Coinbase faces lawsuit over frozen funds from $55M crypto theft

ZachXBT slams Gerstein Harrow for crypto targeting strategy

Gerstein Harrow LLP has a long history of filing similar claims against cryptocurrency companies and platforms following hacks and cybersecurity exploits, including the Harmony protocol, the Bybit cryptocurrency exchange, and others, according to onchain sleuth ZachXBT. 

“This is a predatory US law firm with a strategy that is pure evil,” he said in an X post from May 1, adding that the law firm used his cybersecurity research of various crypto hacking incidents to justify the claims.

“Whenever there’s a new Lazarus Group victim after an exploit and crypto assets get frozen, these clowns come in and say they have a claim for an alleged DPRK victim from 26 years ago that has zero relation to crypto or exploits/hacks,” he added.

Source: ZachXBT

In April, the United States Office of Foreign Assets Control (OFAC) ordered Tether to freeze $344 million in stablecoins tied to Iranian entities.

The asset freeze also drew mixed reactions from the crypto community over the ethics of wallet freezes and the role of centralized crypto issuers in enforcing law enforcement requests. 

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