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XRP 
RLUSD Ripple's chief technology officer defends Tether's freezing of USDT of US$42 million, legal controversy continues
Ripple's chief technology officer David Schwartz publicly supported Tether's decision to freeze US$42.4 million in USDT assets without receiving a formal court order. The move has intensified controversy over the extent of centralized control by stablecoin issuers.
Litigation over Tether's asset freeze
Two Thai businessmen filed legal proceedings against Tether in the Southern District of New York on August 31. They accuse the company of blacklisting 10 Ethereum addresses containing 42,417,785.62 USDTs on October 30, 2025, after being contacted informally by the Homeland Security Investigation Bureau. Formal seizure orders against these funds will not be issued until February 19, 2026. The case is still under trial in the court and has not yet reached a result.
Schwartz said Tether had limited options in this situation, emphasizing the need to ensure the safety of disputed funds until ownership disputes are resolved. His defense was particularly eye-catching given that Ripple is itself the issuer of the regulated competitive stablecoin RLUSD.
Stability coin control and compliance powers
Ripple stipulates in its RLUSD clause that it retains broad powers to freeze wallet addresses in which RLUSD is held in response to legal requirements or in accordance with internal compliance policies, including informal enforcement requests. The agreement also allows RLUSD in one wallet to be destroyed and recast in another wallet, if appropriate.
This approach reveals why Schwartz's support for Tether's pre-emptive action is consistent with Ripple's own stance on compliance.
RLUSD and USDT are both stablecoins managed by the issuer. It is designed to allow for administrative actions such as address freezing, destruction or re-minting of tokens to achieve compliance in fraud investigations, sanctions enforcement, and court-ordered asset seizures.
Micro Dictionary: RLUSD is a regulated dollar-backed stablecoin issued by Ripple with built-in address freezing and recasting capabilities to meet compliance and enforcement requests.
Ripple confirmed that if required by law or for compliance purposes, RLUSD wallets can be blacklisted and tokens can be destroyed or reissued, similar to the measures taken by Tether.
Differences between XRP and native assets
In contrast, Schwartz clarified repeatedly that the native asset XRP of the XRP ledger is not controlled at these issuer levels. XRPL's documentation distinguishes between issuing tokens that can be frozen or withdrawn, and XRP itself-XRP is not within the scope of such mechanisms.
According to Schwartz, Ripple can neither freeze accounts holding XRP nor reverse completed XRP transactions. This design highlights the difference between decentralized protocols like XRP and managed stablecoins like RLUSD or USDT.
Therefore, RLUSD and XRP play fundamentally different roles in the digital asset space and should not be considered interchangeable.
Tether's cooperation with authorities expands
Tether has recently expanded its cooperation with law enforcement. In February, Tether assisted U.S. authorities in seizing nearly $61 million in USDT related to a "pig killing tray" fraud case. The company also reported that it coordinated with U.S. agencies in April to help freeze another $344 million.
February 2026:$61 million was seized/frozen in the background of the "pig pig tray" fraud case.
April 2026: Seizure/freezing of $344 million in the context of coordination with U.S. law enforcement.
The outcome of this ongoing lawsuit may set a precedent for the extent to which stablecoin issuers can act on informal government requests before formal judicial processes are completed.
Schwartz's position highlights a key difference between stablecoins and decentralized assets: stablecoins require management controls to promote compliance, while decentralized assets like XRP cannot be reviewed or reversed after a transaction is settled.
