Cross-Border Payment Firm Conduit Sues Tether Over $2.76M USDT Freeze

Legal documents reveal that cross-border payment service provider Conduit Technology filed a lawsuit against stablecoin issuer Tether on October 5 in the U.S. District Court for the Southern District of New York. The suit centers on Tether's continued freezing of approximately $2.76 million worth of USDT from a Conduit treasury wallet since September 2025. The incident traces back to a police investigation in Brazil.

Freeze Linked to Brazilian Probe, But Conduit Claims Non-Involvement

Conduit's complaint indicates that Tether's freezing action is connected to a Brazilian police investigation targeting certain entities. However, Conduit explicitly states that neither the company itself nor the wallet in question were named as subjects of the investigation or appeared on any official seizure order from Brazilian authorities. This suggests the asset freeze was not executed in response to a judicial request.

The complaint further alleges that a team within Tether, known as the “T3 Financial Crime Unit,” proactively identified and decided to freeze Conduit's wallet based on its own internally developed criteria. This unilateral action directly severed Conduit's access and control over these liquid funds.

Multiple Legal Allegations Raised by Conduit

Based on these facts, Conduit has brought several serious legal allegations against Tether:

  • Conversion: Unlawfully controlling and depriving Conduit of the use of its legitimate property.
  • Unjust Enrichment: Tether gained a benefit through the freeze without legal justification.
  • Breach of Fiduciary Duty: As a custodian of assets, Tether failed to fulfill its duties of good faith and diligence.
  • Computer Fraud: Unauthorized access and control over Conduit's digital assets.

Conduit's demands are clear: first, a court order compelling Tether to immediately unfreeze the $2.76 million USDT; second, compensation for damages arising from the incident, claiming at least the principal amount of the frozen funds, plus additional losses, interest, and related gains.

Underlying Industry Issues Exposed

This lawsuit transcends a mere commercial dispute, spotlighting the boundaries of power for stablecoin issuers within anti-money laundering and compliance frameworks. When an issuer unilaterally freezes user funds based on internal standards rather than explicit judicial orders, the legitimacy and transparency of its authority face serious scrutiny. For businesses relying on USDT for daily cross-border settlements, such incidents undoubtedly increase operational unpredictability and risk. The outcome of this case may well set a significant precedent for crypto asset custody and compliance practices.