Cross-border payments platform Conduit Technology filed a federal lawsuit against Tether on Oct. 5 in U.S. District Court for the Southern District of New York, alleging Tether froze approximately $2.76 million in USDT without warning.
Conduit said the freeze occurred Sept. 24, 2025, blocking access to stablecoins the company had held since May 2025 as working capital for cross-border operations. The lawsuit names Tether Holdings, Tether International, Tether Operations, and Tether Investments S.A. de C.V. as defendants.
Conduit attributes the action to Tether's T3 Financial Crime Unit and argues the unit acted without proper authority. The company said it was not the target of any investigation and had no involvement in a separate Brazilian Federal Police probe broadly linked to the freeze.
The complaint seeks three forms of relief: a declaratory judgment that Tether lacks legal authority to freeze assets without due process, a court order to unfreeze the wallet immediately, and compensatory damages of at least $2.76 million plus any profits generated from reserves backing the locked tokens during the freeze period.
As of Oct. 6, Tether had not formally responded to the allegations. The lawsuit underscores the counterparty risk embedded in centralized stablecoin operations, even for entities holding USDT legitimately on-chain.
