Conduit sues Tether over alleged $2.8M USDT freeze without cause

Crypto payments firm Conduit has filed a lawsuit against Tether, accusing the stablecoin issuer of unlawfully freezing $2.76 million in USDT and refusing to release the funds for over a year. The lawsuit, filed in New York, claims that Tether froze the funds in September 2025 and did not provide a clear reason for the action, instead referring Conduit to a contact in the Brazilian Federal Police without context.

Conduit alleges that Tether failed to respond substantively to its requests to unfreeze the funds, prompting the firm to seek assistance from Brazilian police. The police reportedly confirmed they did not identify Conduit’s wallet for freezing and were unaware of the criteria Tether used to freeze the funds.

The lawsuit notes that the Brazilian police had asked Tether to freeze wallets linked to Onix Intermediações Ltda, a company that used Conduit’s platform. However, Conduit maintains that Onix and its funds never interacted with Conduit’s treasury wallet, which did not even exist when Onix was using the platform. Conduit argues that Tether acted independently to freeze and seize control of its funds based on undisclosed criteria.

The freeze has reportedly hindered Conduit’s ability to pre-fund and settle client transactions, leading to employee layoffs and office closures. Conduit is seeking the unfreezing of the funds, compensatory damages of at least $2.76 million, punitive damages, and restitution of any interest, income, or profit Tether may have earned from the frozen funds.