Conduit Sues Tether Over Frozen $2.76 Million in USDT

Conduit Technology has filed a lawsuit against Tether, the issuer of the USDT stablecoin, in federal court in New York. The lawsuit seeks the return of approximately $2.76 million in USDT that the company claims has been frozen without explanation since Sept. 24, 2025. Conduit alleges that the freeze has crippled its working capital, leading to layoffs and office closures.

The dispute centers on a treasury wallet created by Conduit on May 20, 2025, to hold working capital in USDT. The company claims the wallet was separate from customer transaction wallets and was controlled only by its own treasury personnel. Tether froze the wallet on Sept. 24, 2025, preventing Conduit from sending or receiving USDT, and has not provided a substantive explanation despite repeated requests.

The lawsuit also highlights broader concerns about USDT's use in sanctions-related activity and Tether's banking relationships. A U.S. Senate report found that 84% of transaction accounts linked to Iran-related activity had transacted exclusively in USDT. Additionally, Tether confirmed that some of its funds are held at EQIBank, a digital bank facing potential liquidation after U.S. authorities seized funds linked to payment processor Capstone Ltd.

Conduit is seeking compensatory damages of at least $2.76 million, along with consequential damages for alleged lost business opportunities, liquidity harm, and damage to business relationships. The company argues that Tether's ability to freeze USDT gives the issuer centralized control over tokens held in external wallets, which it claims was exercised without authorization.