On October 5 local time, U.S. cross-border payments company Conduit Technology filed a lawsuit in the U.S. District Court for the Southern District of New York against Tether Holdings and three other Tether-related entities. Conduit alleges that Tether froze $2.76 million in USDT held in its wallet on September 24, 2025, without a legitimate basis, and is seeking the release of the funds and damages. Conduit said the frozen funds were its own working capital, used to pre-fund and settle customer transactions. It claims that having the funds locked for more than a year reduced the volume and speed of its payment processing and disrupted its business.
According to the complaint, the freeze followed an investigation involving Onix Intermediações, a former Conduit customer in Brazil. Conduit alleges that its wallet was not on the Brazilian Federal Police's original list of wallets targeted for freezing and that the T3 Financial Crime Unit (T3 FCU) added the wallet to the freeze list under its own criteria. It also said its last transaction with Onix took place on April 22, 2025, that the wallet was created later, on May 20, and that Onix had never used it. Tether, TRON and TRM Labs jointly established the T3 FCU in 2024 to combat financial crime.
Conduit said it contacted Tether several times in June 2026 but received responses stating that the matter was under review or directing it to contact the Brazilian police. It alleges that on August 19 it sent a demand for the freeze to be lifted within five business days but received no response.
Conduit is seeking the release of the frozen $2.76 million in USDT and at least $2.76 million in damages. It alleges that Tether continued to earn returns by investing the reserve assets backing the frozen tokens in instruments including U.S. Treasury securities, and is also seeking the return of those gains and punitive damages.