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Payments company Conduit Technology has sued Tether over $2.76 million in USDT frozen since September 2025, claiming the stablecoin issuer blacklisted its treasury wallet without any legal order or government directive naming the address.
The complaint, filed Oct. 5 in New York federal court, says Brazilian police told Conduit’s lawyers they never selected the wallet for blocking.
The dispute stems from a Brazilian Federal Police investigation launched in 2024 into financial intermediary Bull Intermediação de Negócios and related company Onix Intermediações. Conduit previously provided payment services to Onix, but says that relationship ended on April 22, 2025.
According to the complaint, Conduit created the treasury wallet at issue on May 20, nearly a month after its relationship with Onix ended. The company maintains that neither Onix nor Bull owned the wallet, deposited funds into it or used it for transactions.
Conduit says Brazilian police later provided Tether’s T3 Financial Crime Unit with cryptocurrency addresses associated with the investigation. The payments company alleges its treasury wallet was not among those addresses.
The complaint further claims that Brazilian authorities later indicated that T3 had identified additional addresses through its own analysis. Conduit argues that this separate screening process ultimately resulted in its wallet being blacklisted.
Conduit’s lawyers allegedly contacted Brazilian investigators and were told the authorities had not selected the company’s address for blocking and were unaware of the criteria Tether used to identify it.
The company says Tether blacklisted the wallet on Sept. 24, 2025. By the end of September 2026, approximately $2.76 million in Frozen USDT remained in the address.
USDT operates differently from decentralized cryptocurrencies such as Bitcoin because Tether retains technical capabilities that allow it to prevent tokens held at particular addresses from being transferred.
Tether’s published terms permit the company to freeze tokens in circumstances involving legal requirements, government authorities, investigations or situations in which the company considers restrictions prudent under its policies.
Tether has used those powers extensively in cooperation with law enforcement agencies. In April, the company said it had supported the freezing of more than $344 million in USDT connected to two TRON addresses targeted by U.S. authorities.
Its financial-crime enforcement also operates through the T3 Financial Crime Unit, a collaboration involving Tether, TRON and blockchain intelligence company TRM Labs. The initiative has dealt with cases involving suspected hacking, drug trafficking, terrorism financing and North Korea-linked activity.
The central dispute in Conduit’s case is therefore not whether Tether can technically freeze USDT. Instead, Conduit is challenging whether the issuer had sufficient legal grounds to exercise that power against its treasury wallet.
The company argues that Tether had no ownership interest in the Frozen USDT and that there was no enforceable agreement authorizing the restriction.
Tether had not publicly responded to Conduit’s allegations as of Oct. 7, according to available records.
Conduit says the wallet served an important role in its international payments business, holding capital used to pre-fund payment routes.
The complaint states that the address processed 4,427 transactions involving 78 counterparties and more than $1.1 billion between May and September 2025.
According to Conduit, losing access to the Frozen USDT reduced the liquidity available to support those payment operations. The company links the restriction to lower transaction capacity, layoffs and office closures, although those claims have not yet been established by the court.
Conduit says it continued efforts to recover the funds throughout 2026. Its lawyers contacted Tether in June and later issued a formal demand on Aug. 19, giving the company five business days to lift the restriction.
The complaint alleges that Tether had previously directed Conduit toward Brazilian authorities but did not restore access after the subsequent communications.
The payments company has brought claims including conversion, unjust enrichment, breach of fiduciary duty and alleged violations of federal computer-fraud law. It has also requested a jury trial.
Beyond seeking access to its Frozen USDT, Conduit wants compensation for losses it attributes to the restriction and punitive damages if the court determines they are appropriate.
The lawsuit also challenges Tether’s treatment of the assets backing the frozen tokens. Conduit argues that although it could not use its USDT, Tether continued holding the corresponding reserve assets and could potentially generate income from them.
The company is therefore seeking an accounting and the return of any reserve-related income that the court determines belongs to Conduit.
The New York lawsuit follows another case challenging the circumstances under which Tether can restrict privately held USDT.
In August, two Thai businessmen sued Tether over approximately $42.4 million in USDT frozen across 10 Ethereum addresses in October 2025. They alleged that Tether acted following an informal request from a U.S. Homeland Security Investigations agent before authorities obtained a seizure warrant.
A federal magistrate subsequently issued a warrant in February 2026 covering tokens associated with an alleged $61 million investment-fraud operation. The plaintiffs argued that the later warrant could not retroactively authorize the earlier Frozen USDT restriction.
The U.S. government thanked Tether for assisting with the related seizure operation, while the Thai plaintiffs continued to dispute the treatment of their specific tokens. Those allegations remain unresolved.
Conduit’s lawsuit involves different parties and a separate investigation, but it raises a similar broader question: how far can a stablecoin issuer go when restricting access to privately held assets?
In Conduit’s case, the company’s complaint rests heavily on its claim that Brazilian authorities never instructed Tether to freeze its treasury wallet.
The litigation will now move through the early stages of the federal court process. Tether is expected to respond to the allegations, after which the case could proceed to dismissal motions, discovery or other preliminary proceedings.
For Conduit, the immediate objective is straightforward: regain control of the $2.76 million in Frozen USDT and obtain compensation for the financial consequences it says resulted from the restriction.
The case could ultimately provide a clearer legal test for how contractual terms, law-enforcement cooperation and a stablecoin issuer’s technical blacklist capabilities interact when privately held USDT is frozen.
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