Conduit Technology has filed suit against Tether, accusing the stablecoin issuer of freezing $2.76 million in the company’s USDT and keeping the funds inaccessible for more than a year. The company argues that the freeze effectively cut off working capital it needed for day-to-day operations.

According to the complaint, the disputed wallet was not identified by Brazilian authorities in the investigation Tether pointed to. Conduit alleges instead that Tether’s own T3 Financial Crime Unit selected the address using undisclosed internal criteria and imposed the freeze on its own initiative.

Wallet freeze at the center of the dispute

The lawsuit says Conduit created the Fireblocks wallet in May 2025 to hold company working capital. Tether froze the wallet on Sept. 24, 2025, according to the complaint, and Conduit says the funds have remained locked since then.

Before the freeze, the wallet had processed 4,427 transactions across 78 counterparties and more than $1.1 billion in volume, the filing states. At press time, the Tron address still held about $2.756 million in TRC-20 USDT along with roughly $33 in TRX.

Conduit challenges Tether’s basis for the action

Conduit’s complaint says Tether repeatedly directed the company to Brazil’s Federal Police for answers. But the company alleges that police later confirmed the wallet was not among the addresses identified in an investigation involving Onix Intermediações.

That point is central to Conduit’s case. It claims Tether did not act on a direct law enforcement request tied to its treasury wallet and instead relied on its own screening standards through the T3 Financial Crime Unit. The complaint argues Tether had no right to deprive the company of funds simply because they were held in USDT.

Claims for damages and alleged business impact

Conduit says losing access to the USDT materially weakened its ability to pre-fund transactions, constraining a significant portion of its operating capital. The company alleges the pressure from the freeze eventually led it to cut staff and shut offices.

The lawsuit includes six causes of action, among them conversion, unjust enrichment, breach of fiduciary duty, and computer fraud. Conduit is seeking to have the wallet unfrozen, recover at least $2.76 million in damages, and obtain an accounting of any income Tether allegedly earned from reserves backing the frozen tokens. It also wants those profits disgorged.

What the case now turns on

The dispute now appears to hinge on whether Tether froze the wallet pursuant to a valid external request or on the basis of its own internal compliance judgment, as Conduit alleges. It also raises the narrower question of what remedies may be available if a court concludes the freeze was improper.

For now, the confirmed next step is the litigation itself. Conduit is asking the court not only to restore access to the wallet but also to determine whether Tether must compensate the company for the locked funds and any reserve-related income connected to the frozen USDT.

Source: news.bitcoin.com