Key facts
- Conduit sued Tether in New York federal court, alleging the stablecoin issuer froze $2.76 million in its treasury wallet on Sept. 24, 2025.
- Conduit claims the freeze has forced layoffs and office closures.
- Tether has refused to release the frozen funds for over a year.
- Conduit alleges Tether earned interest on the backing reserves of the frozen funds.
- The lawsuit includes claims for conversion, unjust enrichment, breach of fiduciary duty, and computer fraud.
Cross-border payments company Conduit has filed a lawsuit against Tether in New York federal court, alleging the stablecoin issuer froze $2.76 million of its funds on Sept. 24, 2025, without justification and has refused to release them for over a year. The complaint, filed Monday, includes claims for conversion, unjust enrichment, breach of fiduciary duty, and computer fraud, demanding the return of the funds.
Conduit states that while a Brazilian police probe into a third party, Onix, was the backdrop, its treasury wallet was created after Onix's last transaction and never held Onix funds. The company asserts that Brazil's Federal Police confirmed they never flagged the wallet and do not know the criteria Tether used, suggesting Tether's own T3 Financial Crime Unit made the decision independently.
The company argues the freeze has severely impacted its business, leading to layoffs and office closures, as the wallet had processed over $1.1 billion in volume in approximately four months prior to being locked. Conduit contends that Tether continues to earn interest on the U.S. Treasury securities backing the frozen tokens.
This lawsuit adds to ongoing scrutiny of Tether's ability to freeze USDT. The company has previously faced lawsuits over frozen funds and has frozen millions in tokens linked to illicit activity and hacks. However, Tether has also faced criticism for allegedly not freezing enough funds, with Senator Richard Blumenthal pointing to Iran's use of USDT for sanctions evasion.