Conduit sues Tether over frozen USDT in New York dispute

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Conduit sues tether over frozen USDT

Highlights

Tether froze $2.76 million in Conduit's treasury wallet and has refused to unfreeze or explain, prompting Conduit's lawsuit in the Southern District of New York.
Conduit alleges the frozen funds were unrelated to a Brazilian investigation into Onix Intermediações and that law enforcement never flagged its wallet or company.
Conduit seeks the return of $2.76 million plus at least another $2.76 million in damages and reserve profits, citing operational harm and business disruption.

New York lawsuit centers on wallet freeze

As reported by The Block, Conduit filed a complaint on Monday in the Southern District of New York alleging that Tether froze $2.76 million of its funds and has refused to release them or explain the action.

In the filing, Conduit says it owes Tether nothing and has no obligation to the stablecoin issuer. The company argues that the frozen wallet functioned as the equivalent of its operating bank account, making the restriction significant for day-to-day business activity.

The lawsuit links the freeze to an investigation sent to the Brazilian Federal Police involving Onix Intermediações, a former Conduit customer. Conduit says law enforcement never flagged its treasury wallet for freezing, and it adds that a Brazilian court confirmed the company was not under investigation in the Onix matter.

According to the complaint, Onix has not used Conduit's platform since April 2025, about a month before the treasury wallet was created. Conduit also says the wallet never held any Onix funds.

Crypto payments impact and damages claim

Conduit uses stablecoins including Tether's USDT and Circle's USDC to move money across more than 100 countries, so the frozen balance affects a business tied directly to international payments flows. The company says the lockup has harmed its operations while Tether continues to earn interest on the reserves backing the blocked USDT.

Beyond requesting the release of the frozen $2.76 million, Conduit is also seeking at least another $2.76 million in damages and profits it says Tether has earned from the reserves. The case highlights how token freezes by stablecoin issuers can create liquidity and counterparty risks for firms that rely on digital dollars as core settlement infrastructure.

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