Conduit sues Tether over $2.76 million USDT freeze in New York

Cross-border payments firm Conduit has sued Tether, the company behind the USDT stablecoin, over $2.76 million the firm says Tether froze and kept for more than a year. The complaint landed Monday in a New York federal court.

Conduit filed in the US District Court for the Southern District of New York. The suit names four Tether entities and asks a judge to rule that the issuer had no right to freeze the money. Conduit wants the funds back, damages of at least $2.76 million, and any profit Tether earned on its reserves while the account stayed locked.

What Conduit says happened

By Conduit's telling, the trouble started in September 2025. The firm says it lost access to its main wallet on September 24 that year. The complaint calls that wallet the "equivalent of its operating bank account," the USDT it moved to settle customer payments across borders. Then one freeze. The account went dark.

According to the complaint, Tether acted after Brazil's Federal Police asked it to freeze wallets linked to Onix Intermediações, a company that had stopped using Conduit's platform in April 2025. Conduit says its treasury wallet did not exist while Onix was a customer. It also says a Brazilian court confirmed the firm was not under investigation, and that police never flagged the wallet.

Conduit put it plainly. The firm, it said in the filing, "owes no money to Tether and has no obligation to Tether." It argues Tether "acted on its own initiative to freeze and seize control of Conduit's funds, based on its own undisclosed criteria."

The complaint lists four legal counts: conversion, unjust enrichment, breach of fiduciary duty and computer fraud. Tether has not explained the freeze, Conduit says, and has not answered requests to lift it.

Tether's freeze power and a second lawsuit

Tether can freeze USDT because it controls the smart contract behind the token. When it blacklists an address, the coins there stop moving. The company says the power lets it cooperate with law enforcement and block criminal use of the stablecoin. Issuers of dollar-backed tokens have used it to lock funds tied to hacks, sanctions and theft.

Conduit is not the only firm taking Tether to court over a freeze. On September 2, 2026, two Thai businessmen, Nutthawat Rukthammachalern and Natthawat Kasamvilas, sued over $42.4 million in USDT that Tether blacklisted across 10 Ethereum addresses in October 2025. Their suit says Tether acted on an informal request from a Homeland Security Investigations agent, with no warrant. A federal seizure warrant came about three months later.

Tether called that case "a baseless attempt to interfere with Tether's important work with global law enforcement, including the Department of Justice, to prevent the unlawful use of USDT." Mark Beckett, the attorney for the two men, saw it the other way. Tether, he said, "has no contractual relationship with our clients, is not a custodian of our clients' USDT, and has no legal right or basis to blacklist our clients' accounts."

That argument runs through both suits. A stablecoin sitting in a private wallet feels like cash the holder controls. The issuer can still switch it off. The money stays locked. Conduit says Tether kept earning interest on the reserves behind its frozen USDT the whole time.

What to watch

Tether has not responded to Conduit's complaint in court. None of the claims have been tested, and the company may yet lay out a defense the current filings do not show. Early days.

One question now sits in front of the same New York court in two separate cases. Does a stablecoin issuer need a court order before it freezes a customer's tokens, or is its own compliance judgment enough? Watch for Tether's first formal answer, and for any early ruling on whether the $2.76 million comes unfrozen before trial.