Conduit Sues Tether for Allegedly Freezing $2.8M in USDt Without Explanation
Vexoda Newsroom
Cross-border payments platform Conduit Technology has filed a lawsuit against stablecoin issuer Tether, alleging that $2.76 million in USDt was frozen in September 2025 without proper justification, i
Cross-border payments company Conduit Technology has initiated legal proceedings against stablecoin giant Tether. Conduit alleges that Tether froze approximately $2.76 million worth of USDt (Tether's US dollar-pegged stablecoin) in a Conduit-controlled digital treasury wallet on September 24, 2025. The lawsuit, filed in the U.S. District Court for the Southern District of New York, asserts that Tether acted without legal entitlement or a valid claim to the funds, causing significant disruption to Conduit's business operations and denying them access to their own assets.
The core of the dispute revolves around a specific sum of USDt held by Conduit. According to the complaint, Conduit began utilizing USDt within its digital treasury in May 2025. The platform claims that Tether unilaterally froze the entire $2.76 million balance just a few months later, in September 2025, providing no adequate justification for the action. Conduit explicitly states that Tether is not permitted to seize funds from businesses simply because they choose to hold those assets in Tether's stablecoin, emphasizing that the frozen funds are unequivocally theirs.
The legal filing suggests that Tether's decision to freeze Conduit's assets was linked to an ongoing investigation by Brazilian federal police, which reportedly commenced in 2024. This investigation targets financial intermediary entities, specifically Bull Intermediação de Negócios and Onix. Conduit claims that Tether, acting independently and based on its own internal criteria, identified Conduit's treasury wallet as potentially connected to these entities and proceeded to freeze the USDt funds as a precautionary measure.
Conduit states that it has made repeated attempts to engage with Tether to resolve the situation and secure the release of the frozen funds. However, as of the filing date, Tether had reportedly not unblocked the USDt or provided a satisfactory explanation for the seizure. Tether has not yet issued a public statement or comment in response to the lawsuit, leaving the market to speculate on the company's stance and the validity of Conduit's claims. This case adds to a growing number of legal challenges faced by stablecoin issuers regarding asset freezes.
This legal action highlights critical questions surrounding stablecoin issuer responsibilities, transparency in fund management, and the potential for private companies to unilaterally restrict access to user assets. The situation underscores the inherent risks associated with holding digital assets, even stablecoins, and the importance of clear protocols for asset freezes, particularly when linked to external investigations. The broader implications could influence how stablecoins are regulated and how users interact with platforms that hold significant digital asset reserves.
Traders and market observers will be closely monitoring the legal proceedings between Conduit and Tether. Key points to watch include Tether's official response to the lawsuit, any evidence presented by both parties regarding the alleged link to the Brazilian investigation, and the court's eventual ruling. Furthermore, recent similar lawsuits against Tether, such as the one involving $42.4 million frozen after a request from U.S. Homeland Security Investigations, will likely be considered as context. The outcome could set important precedents for asset seizure and user rights within the stablecoin ecosystem.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.