Conduit Technology filed a lawsuit against Tether on October 5, 2026, in the Southern District of New York, seeking the return of $2.76 million in USDT that has remained frozen since September 2025. The case names four Tether entities as defendants: Tether Holdings, Tether International, Tether Operations and Tether Investments.
According to the filing, the frozen wallet held Conduit's own working capital. The company says the freeze originated from an investigation by Brazil's Federal Police into Onix Intermediações, a firm that had previously used Conduit's platform. Onix stopped using the service in April 2025, and the wallet now at the centre of the dispute was created roughly a month later.
Conduit maintains the wallet never received funds from Onix and was not among the addresses identified by investigators. The company points to a later statement from Brazil's Federal Police, which it says confirmed it had not requested the freeze of Conduit's wallet and did not know what criteria led Tether to include it. The lawsuit attributes the freeze decision to the T3 Financial Crime Unit.
Scale of the disputed wallet
Before it was frozen, the wallet had processed more than $1.1 billion across 4,427 transactions with 78 counterparties over approximately four months, according to the filing. Conduit argues this level of activity underscores the operational role the funds played in its business, rather than any connection to the Onix investigation.
The company says the freeze has had direct consequences, citing a reduced capacity to finance and settle operations, layoffs and the closure of offices. Conduit is also demanding an accounting of interest, income and profits Tether may have derived from reserves tied to the frozen assets during the period in question.
Legal claims and relief sought
The lawsuit brings claims of conversion, unjust enrichment, breach of fiduciary duty and computer fraud. Conduit is seeking restitution of the frozen funds and damages of at least $2.76 million, along with additional compensation for losses it attributes to the freeze and for any profits Tether generated from related reserves.
The case is at an early stage and the accusations have not been proven in court. Tether had not filed a detailed public response at the time of first reports.
For European users and businesses relying on USDT for settlement and treasury operations, the case highlights a recurring question around stablecoin issuers: the extent of discretion they exercise when freezing wallets linked, even indirectly, to law enforcement investigations, and what recourse account holders have when they say they were caught up in error.
