Tether Hit With $2.76M Lawsuit as Conduit Challenges Year-Long USDT Freeze
Cross-border payments enterprise Conduit Technology has filed a lawsuit against Tether in New York, seeking to unlock $2.76 million in USDT that has been frozen in a treasury wallet since September 2025.
Cross-border payments enterprise Conduit Technology has initiated legal action against cryptocurrency issuer Tether, seeking a judicial directive to unlock $2.76 million in USDT that has remained frozen since September 2025.
According to a complaint submitted on Oct. 5 to the U.S. District Court for the Southern District of New York, Tether improperly locked funds inside a Conduit treasury address absent any court mandate or government directive targeting that specific location.
Conduit maintains that the tokens it aims to retrieve represent corporate property rather than client funds. The litigation requests the restoration of account access alongside $2.76 million in damages and additional forms of relief.
The named defendants comprise Tether Holdings, Tether International, Tether Operations, and Tether Investments. The case remains pending, and Tether has not yet provided a formal reply in court.
Conduit Says Brazilian Police Never Targeted Its Wallet
The dispute stems partly from a Brazilian Federal Police inquiry into the operations of Bull Intermediação de Negócios and Onix Intermediações. Conduit previously maintained a payment processing connection with Onix, which Conduit states concluded on April 22, 2025—exceeding a month prior to the creation of the contested treasury wallet on May 20.
The court filing indicates that law enforcement authorities in Brazil provided a list of potential crypto addresses to the T3 Financial Crimes division of Tether. Conduit’s digital address was absent from the provided list. Legal representatives for Conduit state that T3 independently identified alternative addresses.
Conduit’s counsel notes that Brazilian investigators informed them the Conduit address was never blocked and that local authorities remained unaware of why Tether decided to restrict other locations.
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Tether applied the freeze to the wallet on Sept. 24, 2025, according to Conduit. By late September 2026, the address held approximately $2.76 million USDT. Leading up to the freeze between May and September 2025, the wallet processed 4,427 transactions spanning 78 alternative addresses, totaling over $1.1 billion in volume, Conduit reported.
Lawsuit Tests Tether’s Authority to Freeze USDT
Contrasting with Bitcoin, USDT incorporates issuer-controlled limitations on specific transactions, enabling Tether to block movements involving designated addresses. Guidelines permit Tether to halt USDT transfers upon government request or for alternate reasons deemed valid under its policies.
While Conduit does not dispute Tether’s general ability to restrict USDT transactions, it contends that Tether lacks the contractual right or authority to block treasury transfers. Potential legal arguments cited by Conduit encompass conversion, unjust enrichment, breach of fiduciary duty, and violations of federal computer crime statutes.
The organization asserts that the asset freeze impaired its capacity to prepay cross-border payments, triggering subsequent operational damages like workforce reductions and business closures. These allegations have yet to be adjudicated by a court.
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Additional demands within the lawsuit feature a request for an accounting of profits purportedly generated by Tether through the utilization of reserve assets backing the restricted USDT, alongside punitive damages.
This legal action constitutes an independent proceeding concerning Tether’s freezing capabilities, distinct from Conduit’s separate legal matters linked to the Brazilian investigation. Upcoming phases of the lawsuit will involve formal complaint service, an answer from the defense, and preliminary pretrial proceedings. No substantive ruling has been handed down regarding Conduit’s claims.
