Cross-border payments company Conduit is suing Tether in the U.S. District Court for the Southern District of New York, claiming the stablecoin issuer froze $2.76 million of its treasury wallet on September 24, 2025, without justification and has refused to release the funds.
According to the complaint filed Monday, Conduit's treasury wallet—the digital equivalent of its operating bank account—has remained locked while Tether continues to earn interest on the U.S. Treasury securities backing the frozen tokens. The lawsuit brings claims including conversion, unjust enrichment, breach of fiduciary duty, and computer fraud.
The Disputed Freeze
Conduit says the freeze stems from a Brazilian Federal Police investigation into entities tied to a firm called Onix, which had previously used Conduit's platform. However, Conduit argues the freeze is unjustified because its frozen wallet was created in May 2025, nearly a month after Onix's last transaction on the platform, and never held any Onix funds.
According to the filing, Brazil's Federal Police confirmed they never flagged Conduit's wallet. Conduit says Tether's own T3 Financial Crime Unit made the freezing decision independently, but the company has not disclosed the criteria used.
Business Impact
Conduit contends the freeze has severely damaged its operations. The wallet had processed more than $1.1 billion in volume across approximately four months before being locked. The company says the resulting liquidity shortage forced it to lay off employees and close offices.
Broader Context
The case adds to ongoing scrutiny of Tether's ability to freeze USDT unilaterally. Tether was separately sued this year over a $42.4 million freeze and has frozen hundreds of millions in tokens flagged for illicit activity. The company also recently joined Circle in freezing funds related to the Bitget hack.
