Conduit Technology Sues Tether Over $2.76 Million USDT Freeze

Conduit Technology, Inc., a cross-border payments platform, has initiated legal action against Tether, claiming that the stablecoin issuer unlawfully froze approximately $2.76 million of its USDT. The lawsuit was filed on October 5, 2026, in the US District Court for the Southern District of New York, following a freeze that allegedly occurred in September 2025.

According to the complaint, Conduit lost access to its funds on September 24, 2025, attributing the freeze to Tether’s T3 Financial Crime Unit. The company asserts that this unit acted without proper authority and that there were no compliance issues related to Conduit itself.

The lawsuit names several entities associated with Tether, including Tether Holdings, Tether International, Tether Operations, and Tether Investments S.A. de C.V. Conduit began holding the USDT as working capital in May 2025, and the freeze has been linked to an investigation by the Brazilian Federal Police. However, Conduit maintains that it had no involvement in the investigation and that its digital treasury wallet was not flagged.

In its complaint, Conduit seeks three main outcomes: a declaratory judgment stating that Tether lacks the authority to freeze its assets, a court order to unfreeze the wallet immediately, and compensatory damages of at least $2.76 million. Additionally, the company is pursuing potential consequential damages and any profits generated from the reserves backing the frozen tokens.

As of October 6, 2026, Tether has not publicly responded to the allegations. The case is currently in the initial complaint stage, meaning Conduit’s claims have yet to be tested in court. This lawsuit highlights broader concerns regarding counterparty risk in the stablecoin market, as it raises questions about the issuer's ability to freeze assets without clear justification.