Cross-border payments platform Conduit Technology has filed a formal lawsuit against stablecoin issuer Tether, alleging that the company froze $2.76 million in USDt without proper explanation in September 2025.
In a legal complaint submitted to the US District Court for the Southern District of New York on Monday, Conduit claimed that Tether froze funds belonging to the payments platform to which it had "no legal entitlement" and "no claim." According to the court filing, Conduit began holding USDt as part of its digital treasury wallet operations in May 2025. However, the company alleged that Tether abruptly froze all $2.76 million of the stablecoin holdings in September with "no justification," an action that Conduit stated has "materially impacted its business."
"The funds are unequivocally Conduit’s, but Tether has taken them and is denying Conduit access to them," Conduit alleged in the complaint. The platform further argued that "Tether is not allowed to take money from businesses just because they chose to store that money in Tether’s currency."
According to the details provided in the lawsuit, the freezing of Conduit’s corporate assets was connected to an ongoing Brazilian federal police investigation launched in 2024. That investigation targeted financial intermediaries Bull Intermediação de Negócios and Onix. Tether reportedly identified Conduit’s treasury wallet as being tied to these investigated companies "on its own initiative using its own criteria," leading to the freezing of the $2.76 million on September 24, 2025.
Conduit stated in the lawsuit that it had made repeated requests to Tether asking the stablecoin issuer to unfreeze the funds, but the company had not done so as of Monday. Following the filing of the complaint, media outlets reached out to Tether for comment regarding the lawsuit, but an immediate response was not received.
The legal action taken by Conduit comes approximately a month after a separate high-profile lawsuit involving Tether and frozen digital assets. In that instance, two Thai nationals sued Tether for allegedly freezing $42.4 million in USDt following what they described as an "informal request" from US Homeland Security Investigations. The funds in that case were allegedly linked to a $61 million "pig butchering" scam case filed in the US District Court for the Eastern District of North Carolina, which had issued a seizure warrant for the USDt in February.
Tether, as the issuer of the world’s largest stablecoin by market capitalization, frequently interacts with law enforcement agencies globally to freeze tokens associated with illicit activities, hacking incidents, and financial crimes. Earlier this year, Tether publicly highlighted its compliance efforts, stating that it had helped freeze $550 million in Iran-linked USDT throughout the year. While these freezing mechanisms are often praised by regulators and law enforcement bodies for curbing illicit finance in the digital asset ecosystem, situations where legitimate corporate treasuries or uncharged third parties get caught in freezing sweeps have increasingly drawn legal scrutiny and raised concerns regarding user rights, due process, and the centralized control wielded by issuers over digital assets.
