Key Points
- Conduit Technology filed a federal lawsuit against Tether regarding $2.76 million in restricted USDT holdings.
- The stablecoin issuer placed Conduit’s corporate treasury wallet on its blacklist on Sept. 24, 2025.
- According to Conduit, Brazilian law enforcement authorities did not request the freeze of its specific wallet.
- The plaintiff is seeking restoration of wallet access, minimum damages of $2.76 million, punitive awards and reserve-related income.
- As of Oct. 7, Tether has not issued a public statement addressing the lawsuit.
A cross-border payments provider has initiated legal proceedings against Tether concerning $2.76 million in USDT that remains inaccessible since September 2025.
Conduit Technology submitted its legal complaint on Oct. 5 to the U.S. District Court for the Southern District of New York. The defendants include Tether Holdings, Tether International, Tether Operations and Tether Investments.
According to Conduit, the restricted USDT represents the company’s operational capital rather than client assets. The firm asserts that Tether imposed the freeze absent any valid legal basis.
Brazilian Investigation Connection Disputed
The controversy stems from a 2024 investigation launched by Brazil’s Federal Police. That inquiry centers on financial intermediary Bull Intermediação de Negócios and its affiliated entity, Onix Intermediações.
Conduit previously offered payment processing services to Onix. The company states this business relationship concluded on April 22, 2025, approximately one month prior to establishing the treasury wallet on May 20.
According to the filing, neither Onix nor Bull had ownership of the wallet, transferred funds into it or conducted any transactions through it.
The complaint alleges that Brazilian police provided Tether’s T3 Financial Crime Unit with a roster of suspicious cryptocurrency addresses. Conduit maintains its address did not appear on that official list.
Conduit references a July 2026 document from Brazilian officials. The company states this filing revealed that T3 independently identified additional addresses through proprietary analysis, resulting in the flagging of Conduit’s wallet.
Legal representatives for Conduit assert that Brazilian investigators confirmed they had not designated the address for restriction. The referenced Brazilian document was not included in the public U.S. court filing.
Legal Framework and Corporate Arguments
Unlike decentralized cryptocurrencies such as Bitcoin, USDT includes issuer-controlled freeze capabilities. Tether’s service terms permit wallet restrictions when mandated by legal requirements, when addresses connect to active investigations, or when the company deems such action necessary.
Conduit acknowledges Tether’s technical ability to freeze tokens. However, the company argues Tether lacked legitimate legal justification and enforceable contractual authority to restrict these particular funds.
The firm reports the wallet processed 4,427 transactions involving 78 different counterparties, totaling more than $1.1 billion, during the May through September 2025 period. Conduit attributes reduced operational capacity, workforce reductions and facility closures to the freeze. These assertions await judicial examination.
Conduit states its legal team initiated contact with Tether in June 2026 and delivered a formal demand letter on Aug. 19. While Tether previously directed Conduit toward Brazilian authorities, the funds remained frozen.
The litigation encompasses allegations of conversion, unjust enrichment, breach of fiduciary obligation and violations of federal computer-fraud statutes. Conduit has requested a jury trial.
The company seeks wallet access restoration, damages no less than $2.76 million and punitive awards. Additionally, Conduit demands any revenue Tether generated from reserves supporting the frozen tokens.
This case follows separate litigation filed in August by two Thai entrepreneurs. That lawsuit contests Tether’s freeze of approximately $42.4 million in USDT distributed across 10 Ethereum addresses in October 2025.
Tether frequently collaborates with law enforcement agencies. In April, the company announced it assisted in freezing over $344 million in USDT associated with two TRON addresses targeted by U.S. officials.
As of Oct. 7, Tether has not released any public comments regarding Conduit’s allegations. Upcoming procedural steps include formal service of the lawsuit and Tether’s response.
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