A Brazilian federal appellate court has sided with Gurhan Kiziloz in the first successful appeal of a case that has tied up $527 million in Tether and physical assets since May, ordering a review that could see the funds released by October.
The ruling came Friday from the Regional Federal Court of the 1st Region (TRF1), which found that Brazilian authorities had overstepped jurisdictional limits when they froze the combined sum on the basis of tax and licensing rules that did not exist during the period the conduct in question took place.
The original freeze, executed in May, moved against Kiziloz’s business interests on two fronts. Tether Operations Ltd. locked $213 million across 48 USDT wallets within hours of a Brazilian court order, working directly with regulators to identify and map the accounts. A parallel action froze a further $314 million in corporate and physical assets. Together, the two actions formed one of the largest asset freezes ever carried out against a single individual outside U.S. criminal proceedings.
Both freezes traced back to Kiziloz’s operations between 2021 and 2024, when his companies ran a network of offshore betting platforms serving Brazilian users alongside a series of cryptocurrency token sales. Brazil did not formalise licensing rules for online gambling or a registration framework for token issuance until 2024. Once those rules existed, tax authorities sought to apply them retroactively to the preceding three years, treating revenue from that period as though it had been generated under a regulatory structure that was not yet in place.
Kiziloz’s legal team challenged the freeze on those grounds, arguing that obligations tied to a licensing or registration regime cannot reach back to conduct that predates the regime’s existence. There was no domestic pathway to obtain a gambling licence during 2021–2024, they argued, and no registration process for token issuers to complete. Brazilian constitutional law places explicit limits on retroactive fiscal and regulatory enforcement, and the appeal centred on whether the original freeze had crossed them.
TRF1’s panel found that it had. In its preliminary findings, the court held that applying a 2024 tax code backward onto three years of prior conduct exceeded the jurisdictional authority available to the lower court that issued the freeze. The panel consolidated the Tether and physical-asset freezes into a single docket and granted an injunction beginning the process of unwinding both.
The court characterised its decision as addressing the legality of the freeze mechanism rather than the merits of the case against him, and standard corporate audits of his past operations remain active. No criminal charges have been filed at any point in the proceedings, and the matter continues to be handled as a civil dispute.
What comes next depends on the Superior Court of Justice, which must complete a final procedural review before the funds can move. Court filings point to October as the target for that process to conclude, though the timeline assumes no complications arise during the STJ’s review. Unwinding a consolidated $527 million position, spread across digital wallets and physical holdings, is unlikely to happen as quickly as the original freeze did.
The case has drawn attention from operators beyond Kiziloz’s own companies. A number of international sportsbooks and crypto platforms generated significant revenue from Brazilian users during the same 2021–2024 window, in the same absence of domestic licensing and registration frameworks that formed the basis of the case against him. Had TRF1 upheld the original freeze, the ruling would have signalled that Brazilian authorities could pursue historical revenue from any operator active during that period, a precedent with implications reaching well beyond this single case.
For now, the $527 million remains frozen pending the STJ’s review. Friday’s decision does not release the funds outright, but it is the first ruling since May to move the case toward resolution rather than further restraint. Whether the October timeline holds will depend on how the STJ handles the review TRF1 has now set in motion.
Kiziloz’s legal team has not commented publicly on the ruling beyond confirming that they are pursuing an expedited timeline through the STJ. Brazilian tax authorities have not indicated whether they intend to contest the appellate findings further.
Disclosure: The opinions expressed in this article are provided by a third party. Insider Monkey doesn’t have any economic interests in the companies mentioned in this article. Insider Monkey received compensation in exchange for publishing this article. Insider Monkey doesn’t recommend purchase/sale of any securities, cryptocurrencies, or ICOs. Please get in touch with a financial professional before making any financial decisions. You understand that Insider Monkey doesn’t accept any responsibility and you will be using the information presented here at your own risk. You acknowledge that this disclaimer is a simplified version of our Terms of Use, and by accessing or using our site, you agree to be bound by all of its terms and conditions. If at any time you find these terms and conditions unacceptable, you must immediately leave the Site and cease all use of the Site.
