At a glance

  • Conduit Technology has sued four Tether entities in federal court in New York, alleging that a USDT freeze has kept it out of $2.76 million of its own working capital since 24 Sep 2025.
  • Conduit asks the court to order the wallet unfrozen and to award at least $2.76 million in damages, plus the income Tether earned on the reserves behind the frozen tokens. Tether had not responded as of 6 Oct.

Conduit filed the complaint on 5 Oct in the US District Court for the Southern District of New York, according to the filing, case No. 1:26-cv-08773.

“Tether has no legal entitlement to these funds and no claim to them. Conduit owes no money to Tether and has no obligation to Tether,” the complaint says.

Conduit says it began holding the USDT in May 2025 in a treasury wallet it describes as “the digital equivalent of the company’s operating bank account”. The wallet processed more than $1.1 billion across 4,427 transactions before the freeze, according to the filing.

Why Conduit says the USDT freeze was wrong

The complaint alleges that Brazil’s Federal Police asked Tether to freeze certain wallets in an investigation into Onix Intermediações, a former Conduit customer. Conduit says its wallet was not on that list.

According to the filing, the police said in a 1 Jul 2026 court submission that they passed suspect addresses to Tether’s T3 Financial Crime Unit, which then applied its own criteria. Conduit alleges that Tether chose its wallet on its own initiative and has never explained why.

Conduit says Onix’s last transaction on its platform was on 22 Apr 2025, nearly a month before the treasury wallet was created. A Brazilian court has acknowledged that Conduit is not among the investigated parties, the complaint says.

Conduit says it asked Tether to release the funds at least four times in June 2026 and sent a demand letter on 19 Aug, without result. It says the freeze forced it to lay off staff and close offices. The company uses USDT and USDC to move money across more than 100 countries, The Block reported.

The suit brings six claims, including conversion, unjust enrichment, breach of fiduciary duty and a claim under the federal Computer Fraud and Abuse Act. Conduit has demanded a jury trial.

Tether had not responded to the allegations as of 6 Oct, Crypto Briefing reported. None of the claims has been tested in court.

Issuer freezes have featured in other recent cases. After the Bitget hack, Tether and Circle froze about $340,000 in stablecoins on attacker-linked addresses by 29 Sep, BlockSec reported. CryptoWatchDesk has explained how dollar stablecoins work.

The next step is Tether’s formal answer to the complaint, or a motion to dismiss it.

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Produced by the Crypto Watch Desk newsroom using AI tools. This article is for information only and is not investment advice.