Tether's Freeze Tag Costs Conduit $2.76M — And Counting ❄️

Cross-border payments company Conduit is suing Tether in federal court, alleging the stablecoin issuer froze $2.76 million of its funds without justification and has refused for more than a year to release them. The complaint, filed Monday in the U.S. District Court for the Southern District of New York, claims Tether locked Conduit's digital treasury wallet on Sept. 24, 2025, and has continued to hold the funds while earning interest on the U.S. Treasury securities backing the frozen USDT. The suit brings claims including conversion, unjust enrichment, breach of fiduciary duty and computer fraud, and demands the funds be returned.

At the center of the dispute is a Brazilian investigation Conduit says has no connection to it. According to the filing, Brazil's Federal Police were probing entities tied to Bull Intermediação de Negócios and a firm called Onix, which had once used Conduit's platform. Conduit alleges its frozen treasury wallet was created in May 2025, nearly a month after Onix's last transaction on its platform, and never held any Onix funds. The company says the Federal Police confirmed they never flagged the wallet and do not know what criteria Tether used to freeze it, pointing instead to Tether's T3 Financial Crime Unit as having acted independently.

Conduit argues the freeze has gutted its operations. The wallet processed more than $1.1 billion in volume across roughly four months before being locked, and the company says the resulting liquidity hit forced it to lay off employees and close offices. "The funds are unequivocally Conduit's, but Tether has taken them and is denying Conduit access to them," the complaint states, adding: "Tether is not allowed to take money from businesses just because they chose to store that money in Tether's currency."

The case adds to a growing pile of legal pressure on Tether over its freezing authority. Nutthawat Rakthammachalern and Natthawat Kasamvilas filed a complaint Monday in the U.S. District Court for the Southern District of New York alleging Tether blacklisted ten Ethereum addresses holding roughly $42.4 million worth of USDT, without legal authority. Tether was separately sued earlier this year over the same $42.4 million freeze, and the company has frozen hundreds of millions in tokens flagged for illicit activity. Tether also recently joined Circle in freezing funds tied to the Bitget hack, while Sen. Richard Blumenthal has criticized USDT as a "superhighway" for sanctions evasion, pointing to Iran's use of the stablecoin. Cointelegraph reached out to Tether for comment on the Conduit lawsuit but did not receive an immediate response.