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Conduit sues Tether over $2.76 million in frozen USDT
The cross-border payments firm says Tether's financial crime unit locked its treasury wallet without notice or legal authority
Cross-border payments platform Conduit Technology, Inc. has taken Tether to federal court. The company alleges the stablecoin issuer froze approximately $2.76 million of its USDT without warning or explanation.
The complaint was filed on October 5, 2026, in the US District Court for the Southern District of New York.
What Conduit is alleging
According to the complaint, the freeze took place in September 2025. Conduit says it lost access to the funds as of September 24, 2025.
The company attributes the action to Tether’s T3 Financial Crime Unit. Conduit argues that unit acted without authority and without any compliance issue tied to Conduit itself.
The lawsuit names several Tether entities as defendants. These include Tether Holdings, Tether International, Tether Operations, and Tether Investments S.A. de C.V.
Conduit says it began holding the USDT in May 2025 as working capital.
The freeze has been linked to a Brazilian Federal Police investigation. Conduit, however, claims it had no involvement in that probe. It also says its digital treasury wallet was not flagged in the investigation.
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What Conduit wants from the court
The company is asking for three main things. First, a declaratory judgment stating that Tether lacks the legal authority to freeze its assets.
Second, a court order requiring Tether to unfreeze the wallet immediately. Third, compensatory damages of at least $2.76 million.
Conduit is also seeking potential consequential damages and any profits generated from the reserves backing the frozen tokens.
As of October 6, 2026, Tether had not responded to the allegations. The case remains at the initial complaint stage, so none of Conduit’s claims have been tested in court yet.
Background: the freeze button nobody talks about at parties
Most people think of USDT as a digital dollar. Fewer think about the fact that the issuer can stop specific tokens from moving.
Conduit’s suit fits a broader pattern of legal challenges against Tether over freezes the company imposes on its own initiative.
What this means for stablecoin users
Conduit’s complaint reads like a test case for counterparty risk. Its argument is simple: it held the tokens legitimately, it was not the target of the investigation, and it still lost access to $2.76 million.
Key things to watch next include Tether’s formal response and any motion to dismiss. Also worth tracking is whether the company explains the basis for the freeze or how it connects to the Brazilian investigation.
The court’s handling of the jurisdiction question could be telling as well. Several of the named defendants are entities outside the US, and how the Southern District of New York treats them may shape similar disputes down the line.