Cross-border payments Fintech Conduit Technology has filed a federal lawsuit accusing stablecoin issuer Tether of locking roughly $2.76 million of the firm’s USDT and refusing either to release the balance or to explain the action.
The complaint, lodged on October 5, 2026, in the US District Court for the Southern District of New York (SDNY) as case 1:26-cv-08773, names several Tether entities and argues that the issuer has no lawful claim to the tokens.
According to the filing, Conduit began holding working capital in a digital treasury wallet in USDT in May 2025.
The company describes that address as the functional equivalent of its operating bank account and says it selected the token because of Tether’s representations that holders could move funds freely.
On September 24, 2025, Tether froze the entire $2.76 million balance.
More than a year later, Conduit says it still cannot spend or transfer the tokens, despite repeated requests for an explanation or a return of the funds.
The complaint ties the freeze to a Brazilian Federal Police inquiry involving Bull Intermediação de Negócios and Onix Intermediações, a former Conduit customer.
Conduit alleges that investigators supplied a list of addresses to Tether’s T3 Financial Crime Unit, which then applied its own undisclosed criteria and included Conduit’s wallet.
The payments firm contends that its address was never on the original police list, that a Brazilian criminal court has recognized Conduit is not among the parties under investigation, and that no court order directed the freeze.
Timing is central to the argument.
Conduit says Onix last used its platform on April 22, 2025, about a month before the treasury wallet even existed, and that the wallet never held Onix-related funds.
In the roughly four months before the freeze, the address is said to have processed 4,427 transactions with 78 counterparties, moving more than $1.1 billion, none of it involving Onix.
Conduit maintains it owes Tether nothing and has no contractual obligation that would justify the restriction.
The suit further claims Tether is not a custodian of the tokens and never received consent to control them.
Technical ability to blacklist an address, the complaint argues, does not create a legal right to do so.
While the funds remain blocked, Conduit says it has suffered operational harm, including layoffs and office closures, even as Tether continues to earn yield on the reserves backing the frozen USDT.
Conduit seeks a declaration that Tether lacks authority to freeze or interfere with the wallet, an order requiring immediate restoration of access, compensatory damages of at least $2.76 million, disgorgement of interest earned on the related reserves, an accounting, and punitive damages.
Causes of action include conversion, unjust enrichment, breach of fiduciary duty, and claims under the Computer Fraud and Abuse Act. The case joins other pending challenges in the same court over Tether freezes carried out without a warrant or formal legal process directed at the issuer.