Conduit sues Tether in SDNY over $2.76M USDT frozen for 12 months

Cross-border payments firm Conduit filed suit against Tether Holdings in the U.S. District Court for the Southern District of New York on October 6, 2026, alleging the USDT issuer froze $2.76 million of the company's treasury wallet on September 24, 2025 and has held the funds for more than a year without producing a court order or regulator request. Decrypt and The Block both carry the complaint.

What happened

Conduit's complaint, filed at 1:54 PM EDT, names Tether as the sole defendant. According to the complaint summary reported by both outlets:

• $2.76 million USDT sat in a treasury wallet Conduit says it created in May 2025 as the operating account for its payments business across 100+ countries.
• On September 24, 2025, Tether's internal compliance arm — the T3 Financial Crime Unit — flagged and froze the balance.
• Tether has not released the funds in the 377 days since; Conduit's complaint says the issuer continues collecting interest on the Treasury reserves backing the frozen tokens.

Conduit's requested relief: the $2.76 million plus an additional $2.76 million in damages and disgorged profits on the reserves.

The Brazilian investigation Conduit says isn't theirs

Both reports trace the freeze to a Brazilian Federal Police probe of Onix Intermediações, a former Conduit customer. Per Decrypt's reading of the complaint:

• Onix stopped using Conduit's platform in April 2025, before the frozen treasury wallet existed.
• Brazilian Federal Police did not flag the specific treasury wallet, and a Brazilian court separately confirmed Conduit was not under investigation.
• The complaint says Tether's T3 unit made the freeze call unilaterally — not at law-enforcement request.

The wallet had reportedly processed ~$1.1 billion of volume in the four months before the freeze. Conduit says the lockup forced layoffs and office closures.

Why this sits in the SDNY

The suit's four counts, per The Block, are:

1. Conversion.
2. Unjust enrichment — the yield-on-reserves claim.
3. Breach of fiduciary duty.
4. Computer fraud — a federal statutory hook (CFAA-adjacent) that keeps the case in federal court.

The venue matters: SDNY is the same bench that heard the New York Attorney General's 2021 settlement with Tether and Bitfinex, and the court the DOJ used in prior stablecoin matters. Tether's response is not reported in either filing.

Numbers block

• Frozen balance: $2.76M USDT.
• Freeze date: 2025-09-24.
• Days frozen at filing: ~377.
• Pre-freeze four-month wallet volume: $1.1B.
• Damages sought: $5.52M (principal + equal damages).

What to watch

1. Tether's answer — the issuer rarely litigates US freezes to merits; a dispositive motion versus an answer-on-the-merits is the first signal.
2. Any US regulator joinder — if Treasury or DOJ enters the case the posture changes from private commercial dispute to policy fight.
3. The underlying wallet address. Neither write-up names it; the complaint itself will. The exact address + its chain are the primary verifiable artifact.
4. Precedent for stablecoin issuer freezes. Tether froze about $2.5B of USDT in aggregate across 2020–2025 per prior company disclosures; nearly all were tied to law-enforcement requests. A unilateral freeze litigated to a judgment would be the first of its kind.

Context

Freeze capability has been a selling point to US regulators since Tether's 2021 settlement, but the written policy is sparse: Tether says it acts "in consultation with law enforcement" without binding itself to a court order or sanctions designation. The Conduit filing — if the facts hold — is the first test of that gap on a US docket. It also lands four months after the GENIUS Act stablecoin framework took effect, which requires issuers that market in the US to document and disclose freeze policies; Tether operates outside the US-regulated issuer regime and is not GENIUS-registered.