Crypto payments firm Conduit has filed a lawsuit in New York accusing Tether of improperly freezing $2.76 million in USDT and keeping the tokens blocked for more than a year. According to the complaint, the freeze was imposed in September 2025 and Tether has not restored access to the funds despite repeated requests.
Conduit alleges that Tether never provided a clear explanation for the action and instead repeatedly directed the company to a contact at Brazil’s Federal Police without context. The company says it later approached Brazilian authorities itself and was told police had not identified Conduit’s wallet for freezing.
Dispute centers on a September 2025 wallet freeze
The lawsuit claims Tether froze Conduit’s treasury wallet in September 2025, leaving $2.76 million worth of USDT inaccessible. Conduit says the stablecoin issuer did not give a substantive response when asked to reverse the block or explain the basis for it.
In the complaint, Conduit argues that Tether effectively seized control of the funds using undisclosed criteria and then refused to return them. The company characterizes the freeze as an action taken on Tether’s own initiative rather than one directly tied to a valid instruction concerning Conduit’s wallet.
Brazil police link forms part of Conduit’s case
Conduit says Tether repeatedly referred it to a Brazilian Federal Police contact but did not explain why. After seeking help directly from Brazilian authorities, the company says police confirmed they had asked Tether to freeze wallets connected to Onix Intermediações Ltda, a company that had used Conduit’s platform.
The lawsuit says Onix shares ownership with Bull Intermediação de Negócios Ltda, which is under police investigation. But Conduit contends that neither Onix nor its funds interacted with the treasury wallet that was frozen. It also claims that the treasury wallet did not yet exist during the period when Onix was using Conduit’s platform.
Conduit says the freeze harmed its business
Beyond the blocked funds themselves, Conduit says the freeze disrupted its operations because the treasury wallet was used to pre-fund and settle client transactions. The company alleges the loss of access impaired its ability to run those functions normally.
According to the complaint, the consequences included staff layoffs and office closures. Those claims form part of Conduit’s argument that the freeze caused wider commercial damage beyond the value of the USDT held in the wallet.
What Conduit is asking the court to do
Conduit’s lawsuit includes claims for conversion, unjust enrichment, breach of fiduciary duty, computer fraud, a declaratory judgment, and an accounting of reserves and any interest, profits, or income Tether may have earned from the frozen funds since September 2025.
The company is asking the court to order the USDT unfrozen and to award compensatory damages of at least $2.76 million. It is also seeking punitive damages, along with restitution and disgorgement of any income or profit Tether may have made from the funds while they remained blocked.
The next confirmed step is the court process in New York, where Tether will have the opportunity to respond to the allegations. For now, the central factual dispute is whether the freeze was justified by law enforcement-related concerns or whether, as Conduit claims, its wallet was blocked without a valid basis.
Source: protos.com