Conduit sues over Tether’s $2.76M stablecoin freeze in federal court

Conduit, a cross-border payments platform, has sued Tether in federal court over a Tether stablecoin freeze that locked up $2.76 million of its funds more than a year ago and, according to the company, has never been properly explained. The freeze itself dates back to Sept. 24, 2025, but the lawsuit landed this week, giving the long-running dispute a new legal chapter.

Key takeaways

• Conduit filed suit against Tether in New York federal court over a frozen treasury wallet.
• Tether locked $2.76 million in USDT on Sept. 24, 2025, and has not released it.
• Conduit says its wallet was never tied to a Brazilian police probe into Onix.
• Tether’s own T3 Financial Crime Unit, not police, flagged the wallet, the suit claims.
• Conduit says the freeze forced layoffs and office closures.

Conduit Files Suit Over the Stablecoin Freeze

According to Decrypt, Conduit filed a complaint on Monday in the U.S. District Court for the Southern District of New York, alleging that Tether froze its digital treasury wallet with “no justification.” The company says it had been holding USDT in that wallet since May 2025 and that the full $2.76 million was frozen on Sept. 24, 2025. “Tether is not allowed to take money from businesses just because they chose to store that money in Tether’s currency,” Conduit said in the complaint, as reported by Cointelegraph. Before the freeze, the wallet reportedly processed more than $1.1 billion in volume over roughly four months.

Dispute Over the Brazilian Police Probe

Conduit says the freeze traces back to a Brazilian federal police investigation opened in 2024 into Bull Intermediação de Negócios and a company called Onix. But Conduit insists its wallet was created after Onix’s last transaction and never held Onix funds. The complaint alleges Tether identified the wallet as linked to those companies “on its own initiative using its own criteria,” through its T3 Financial Crime Unit, rather than at police request. Conduit says the Federal Police confirmed they never flagged its wallet and remain unaware of what criteria Tether used to freeze it.

Business Fallout and Tether’s Continued Earnings

Conduit argues the liquidity hit from the frozen funds forced it to lay off staff and close offices. The company further asserts that Tether continues to profit from interest on the U.S. Treasury securities backing the frozen tokens, yet still declines to release them despite Conduit’s repeated requests.

Part of a Broader Pattern of Scrutiny

The case adds to growing scrutiny of Tether’s ability to freeze USDT holdings at will. It follows a separate lawsuit filed roughly a month earlier by two Thai nationals who accused Tether of freezing $42.4 million tied to a pig-butchering scam case, after what they described as an informal request from U.S. Homeland Security Investigations, according to Cointelegraph. As of Monday’s filing, Conduit’s $2.76 million remained frozen.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.