Payments firm Conduit sues Tether over $2.76 million frozen for a year

A stablecoin issuer's power to freeze tokens is being tested in court. Conduit, a cross-border payments company, has sued Tether in the US District Court for the Southern District of New York over $2.76 million in USDT that it says has been locked for more than a year, The Block and Crypto Briefing reported.

The complaint was filed on Monday, according to Crypto Briefing. It says Tether froze a treasury wallet that Conduit used as an operating account on September 24, 2025.

Conduit's account is that the freeze traces to a Brazilian Federal Police investigation involving a former customer, Onix Intermediacoes. The company says its wallet was never flagged by Brazilian police, that a Brazilian court confirmed Conduit was not under investigation, and that Onix stopped using its platform in April 2025, before the wallet existed.

Conduit is asking the court to declare that Tether has no right to hold the funds, to order the wallet unfrozen, and to award at least $2.76 million in damages plus profits Tether earned on the reserves behind the tokens.

Tether had not responded publicly, according to the reports. These are Conduit's allegations, and no court has ruled on them.

The case matters beyond one wallet. Tether can freeze USDT at any address, and this freeze was carried out by its T3 Financial Crime Unit, Crypto Briefing reported. The suit asks a court to say when such a freeze is allowed.