Conduit Takes Tether to Court Over $2.76 Million USDT Freeze
Cross-border payments firm Conduit Technology has sued Tether over $2.76 million in USDT that it says the stablecoin issuer froze without legal justification. The company filed the case in the U.S. District Court for the Southern District of New York on Oct. 5.
Conduit says Tether blocked its treasury wallet on Sept. 24, 2025, and has kept the funds inaccessible for more than a year. The company claims the wallet held its own working capital and was not connected to the Brazilian investigation that allegedly prompted the freeze.
The lawsuit puts renewed attention on Tether’s ability to restrict USDT held in external wallets.
Brazil investigation drives dispute
Conduit says the freeze relates to a Brazilian Federal Police investigation involving other companies, including Onix Intermediações. However, the company argues that its wallet had no connection to those entities.
According to the complaint, Brazilian authorities provided Tether with cryptocurrency addresses linked to the investigation. Conduit says its treasury wallet was not among those addresses. It also claims Brazilian authorities later confirmed that they had not identified the wallet for freezing.
Conduit further says the disputed wallet was created after Onix’s last transaction through its platform and never held Onix funds.
The company alleges that Tether’s own financial-crime unit identified the wallet using undisclosed criteria. Conduit says the freeze disrupted its ability to pre-fund and settle international payments.
Broader scrutiny of Tether’s freeze authority
Conduit is seeking restoration of access to the $2.76 million, along with at least $2.76 million in damages. It also wants compensation for alleged business losses and an accounting of income generated from reserves backing the frozen USDT.
The case arrives as regulators and financial institutions continue to examine stablecoins and their role in cross-border payments and financial crime controls.
Tether has previously used its ability to freeze USDT in response to investigations and suspected illicit activity. The Conduit lawsuit instead raises a different question: how far that power extends when the issuer acts without a direct court order involving the wallet holder.
The allegations remain unproven, and the court has not ruled on whether Tether acted unlawfully. Tether had not publicly responded to the lawsuit at the time of reporting.
