Conduit sues Tether over a $2.76 million USDT freeze
Updated: 6 days ago
TL;DR: Cross-border payments firm Conduit has sued Tether in a New York federal court, alleging the stablecoin issuer froze its treasury wallet for over a year with no legal basis.
The lawsuit
Conduit filed suit in the US District Court for the Southern District of New York, alleging Tether froze $2.76 million of USDT — frozen in September 2025 and locked since. The affected wallet was Conduit’s treasury, described as the equivalent of its operating bank account.
Conduit says the freeze stemmed from a Brazilian Federal Police investigation into a former customer, Onix, and that a Brazilian court confirmed Conduit itself was not under investigation. It is seeking release of the $2.76 million plus a further $2.76 million in damages and profits.
Why it matters
The case tests the limits of a stablecoin issuer’s unilateral freeze power — an increasingly important governance question as USDT underpins global payments across more than 100 countries. For any business holding stablecoins operationally, that power is a live risk.
Tether now faces several freeze-related lawsuits, which suggests the tension between compliance-driven freezes and the rights of innocent holders is becoming a recurring legal flashpoint, not a one-off.
What businesses should take away
If your business touches stablecoins for treasury or settlement, understand that a single issuer can, in effect, immobilise funds — and plan for it with diversification, clear counterparties and contingency liquidity.
The broader point is that ‘digital dollars’ still carry centralised control. The convenience is real, but so is the dependency on one issuer’s compliance decisions.
Quick FAQ
What is Conduit alleging?
That Tether froze $2.76 million of USDT in Conduit’s treasury wallet in September 2025 and kept it locked for over a year without legal basis, despite a Brazilian court confirming Conduit was not under investigation.
What is Conduit seeking?
Release of the frozen $2.76 million plus a further $2.76 million in damages and profits it says Tether earned on the backing reserves.
Why is the case significant?
It tests how much unilateral freeze power a stablecoin issuer holds over businesses that rely on its token for payments and treasury.
Stablecoins feel like digital cash until the issuer flips a switch. This case is a reminder that ‘digital dollars’ still carry centralised control, and any business using them for treasury or settlement needs a plan for the day a single compliance decision locks the account. — Daniel Nikolla, Founder of Merx Marketing
Stablecoins still carry centralised control — if your treasury or settlement touches them, plan for issuer freeze risk with diversification and contingency liquidity.
If a stablecoin issuer froze your operating funds tomorrow, how long could your business keep running?
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Sources: The Block and Decrypt.
Related reading
Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
