Conduit Sues Tether Over $2.76 Million in Frozen USDT

Conduit Technology, Inc., a cross-border payments platform, has filed a lawsuit against Tether in federal court, alleging that Tether froze approximately $2.76 million of its USDT without warning or explanation. The complaint, filed on October 5, 2026, in the US District Court for the Southern District of New York, claims the freeze occurred in September 2025, specifically on September 24.

Conduit argues that Tether’s T3 Financial Crime Unit acted without authority and without any compliance issue tied to the company itself. The lawsuit names several Tether entities as defendants, including Tether Holdings, Tether International, Tether Operations, and Tether Investments S.A. de C.V. Conduit began holding the USDT in May 2025 as working capital.

The freeze has been linked to a Brazilian Federal Police investigation, but Conduit claims it had no involvement in that probe. The company also asserts that its digital treasury wallet was not flagged in the investigation. Conduit is seeking a declaratory judgment stating that Tether lacks the legal authority to freeze its assets, a court order requiring Tether to unfreeze the wallet immediately, and compensatory damages of at least $2.76 million. Additionally, it is seeking potential consequential damages and any profits generated from the reserves backing the frozen tokens.

As of October 6, 2026, Tether had not responded to the allegations. The case remains at the initial complaint stage, so none of Conduit’s claims have been tested in court yet. The lawsuit highlights broader legal challenges against Tether over freezes the company imposes on its own initiative.