TLDR
- Conduit Technology sued Tether in New York federal court over $2.76 million in frozen USDT.
- Tether blacklisted Conduit’s treasury wallet on Sept. 24, 2025.
- Conduit says Brazilian police never asked Tether to freeze its wallet.
- The company wants access restored, at least $2.76 million in damages, punitive damages and reserve income.
- Tether had not publicly responded to the allegations as of Oct. 7.
Cross-border payments company Conduit Technology has sued Tether over $2.76 million in USDT. The funds have been frozen since September 2025.
The complaint was filed on Oct. 5 in the U.S. District Court for the Southern District of New York. It names Tether Holdings, Tether International, Tether Operations and Tether Investments as defendants.
Conduit says the frozen USDT was part of its own working capital, not customer money. The company claims Tether restricted the funds without any legal claim against it.
Conduit Says Brazil Never Targeted Its Wallet
The dispute is linked to a Brazilian Federal Police investigation opened in 2024. The probe involves financial intermediary Bull Intermediação de Negócios and a related company, Onix Intermediações.
Conduit once provided payment services to Onix. It says that relationship ended on April 22, 2025, almost a month before it created the treasury wallet on May 20.
The company says neither Onix nor Bull owned the wallet, sent money to it or used it for transactions.
According to the complaint, Brazilian police shared a list of suspected crypto addresses with Tether’s T3 Financial Crime Unit. Conduit says its address was not on that list.
Conduit points to a July 2026 filing from Brazilian authorities. It says this showed T3 found other addresses through its own analysis, which is how Conduit’s wallet was flagged.
Conduit’s lawyers say Brazilian investigators told them they had not picked the address for blocking. The Brazilian filing was not made public with the U.S. complaint.
Tether’s Terms and Conduit’s Claims
Unlike Bitcoin, USDT can be frozen by its issuer. Tether’s terms allow freezes when required by law, when an address is tied to an investigation, or when the company considers it prudent.
Conduit does not dispute that Tether can technically freeze tokens. It argues Tether had no legal grounds and no enforceable contract allowing it to freeze these funds.
The company says the wallet handled 4,427 transactions with 78 counterparties, worth over $1.1 billion, between May and September 2025. It links the freeze to lower payment capacity, layoffs and office closures. The court has not tested those claims.
Conduit says its lawyers contacted Tether in June 2026 and sent a formal demand on Aug. 19. Tether had earlier pointed Conduit to Brazilian authorities but did not release the funds.
The lawsuit includes claims of conversion, unjust enrichment, breach of fiduciary duty and federal computer-fraud violations. Conduit has asked for a jury trial.
It seeks restored access, at least $2.76 million in damages and punitive damages. It also wants any income Tether earned on reserves backing the frozen tokens.
The case follows a separate August lawsuit from two Thai businessmen. They are challenging Tether’s freeze of about $42.4 million in USDT across 10 Ethereum addresses in October 2025.
Tether often works with law enforcement. In April, it said it supported freezing more than $344 million in USDT tied to two TRON addresses targeted by U.S. authorities.
As of Oct. 7, Tether had not publicly responded to Conduit’s allegations. The next steps include serving the lawsuit and a response from Tether.
