Conduit has filed a lawsuit against Tether in the U.S. District Court for the Southern District of New York, alleging the stablecoin issuer froze $2.76 million in USDT held in its treasury wallet without justification and has refused to release it for more than a year. The complaint, filed Monday, includes claims of conversion, unjust enrichment, breach of fiduciary duty and computer fraud, and demands the return of the funds.
According to Conduit, the wallet was frozen on Sept. 24, 2025, despite the fact it was created in May 2025 — nearly a month after the last transaction connected to Onix, a Brazilian firm under Federal Police investigation. The company says the wallet never held Onix funds, and Brazilian authorities confirmed they did not flag the wallet. Instead, Conduit points to Tether’s T3 Financial Crime Unit as having made the freeze decision independently.
The freeze had severe consequences, Conduit says: the wallet processed more than $1.1 billion in volume over roughly four months, and the liquidity loss forced layoffs and office closures. Meanwhile, Tether continues to earn interest on the U.S. Treasury securities backing the frozen tokens. The case highlights Tether’s centralized freeze power, which Bitcoin lacks, and adds to broader scrutiny of stablecoin controls.
The dispute is part of mounting legal and political pressure on Tether. The company was separately sued this year over a $42.4 million freeze and has frozen hundreds of millions in tokens linked to illicit activity. It also recently joined Circle in freezing funds tied to the Bitget hack. Senator Richard Blumenthal has called USDT a “superhighway” for sanctions evasion, underscoring the tension between preventing illicit finance and respecting business users’ due process rights.
