Conduit Sues Tether Over Alleged Unjustified Freeze of $2.76 Million

Cross-border payments company Conduit has filed a lawsuit against Tether, alleging that the stablecoin issuer froze $2.76 million in its treasury wallet without justification. The freeze, which occurred on September 24, 2025, has persisted for over a year despite Conduit's claims that the funds are unrelated to any illicit activity. Conduit argues that the frozen wallet was created after Onix, a third party under investigation by Brazilian police, had last used its platform and never held any Onix funds. The company also asserts that Tether's own T3 Financial Crime Unit made the decision to freeze the wallet, not the Brazilian authorities.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, includes claims of conversion, unjust enrichment, breach of fiduciary duty, and computer fraud. Conduit contends that the freeze has severely impacted its business, leading to layoffs and office closures. Meanwhile, Tether continues to earn interest on the reserves backing the frozen stablecoins, a situation Conduit describes as "reaping the financial rewards" of the freeze.

The case highlights growing scrutiny over Tether's ability to freeze stablecoins at will. Earlier this year, Tether faced another lawsuit over a $42.4 million freeze and has frozen hundreds of millions in tokens tied to illicit activity. The company has also recently joined Circle in freezing funds linked to the Bitget hack. Despite this, Tether has faced criticism for not freezing enough, with Sen. Richard Blumenthal accusing USDT of being a "superhighway" for sanctions evasion, particularly in relation to Iran.