Conduit Technology Inc., a company specializing in cross-border payments, has filed a lawsuit against multiple Tether entities in the U.S. District Court for the Southern District of New York. The complaint, submitted on October 5, 2026, claims that Tether froze approximately $2.76 million in USDT held in the firm’s digital treasury wallet on September 24, 2025, and has refused to restore access since then.

The suit names Tether Holdings S.A. de C.V., Tether International S.A. de C.V., Tether Operations S.A. de C.V., and Tether Investments S.A. de C.V. as defendants. Conduit asserts that the funds formed part of its working capital and that Tether had “no legal entitlement” or claim to them.

Details of the Alleged Freeze

According to the court filing, Conduit began holding USDT in its treasury wallet in May 2025 as part of ordinary business operations. The wallet, described as the digital equivalent of an operating bank account, processed more than $1.1 billion in volume across roughly 4,427 transactions involving 78 counterparties in the four months before it was locked.

On September 24, 2025, Tether blocked access to the entire $2.76 million balance. Conduit states it received no prior notice and no explanation at the time of the freeze. The company says it has repeatedly requested the release of the funds, but Tether has not restored access or provided a substantive response.

Conduit further contends that Tether has continued to earn interest on the U.S. Treasury securities and other reserves that back the frozen tokens, while the payments firm has been deprived of critical liquidity.

Connection to Brazilian Investigation

The lawsuit links the freeze to an ongoing Brazilian federal police investigation that began in 2024 into Bull Intermediação de Negócios and Onix Intermediações Ltda. Onix had previously used Conduit’s platform. Conduit maintains that its treasury wallet was created nearly a month after Onix’s last transaction on the platform and never held any Onix funds.

The complaint states that Tether’s T3 Financial Crime Unit identified the wallet using its own internal criteria and acted independently. Brazilian authorities later confirmed they had not flagged Conduit’s wallet for freezing and did not know what evaluation standards Tether applied. A Brazilian criminal court also determined that Conduit was not among the companies under investigation or subject to any asset-freeze order.

Conduit says it was directed by Tether to contact Brazilian police for further information but received no resolution through that channel.

Business Impact and Legal Claims

The freeze has had significant operational consequences, according to the filing. Conduit reports that the sudden loss of liquidity forced employee layoffs and the closure of offices. The company argues the action disrupted its ability to settle client transactions and maintain day-to-day operations.

Legal claims in the complaint include conversion, unjust enrichment, breach of fiduciary duty, and computer fraud. Conduit seeks a declaratory judgment that Tether lacked legal authority to freeze the wallet, an immediate court order to restore access, compensatory damages of at least $2.76 million, disgorgement of any profits or interest Tether earned on the backing reserves, an accounting of those reserves, and other relief.

Broader Context of Recent Freezes

The action follows a separate lawsuit filed about a month earlier by two Thai nationals who alleged that Tether froze $42.4 million in USDT after what they described as an informal request from U.S. Homeland Security Investigations. Those funds were connected to a $61 million pig-butchering investigation that produced a federal seizure warrant in the Eastern District of North Carolina earlier in the year.

Tether has also publicly noted its cooperation with authorities in freezing roughly $550 million in USDT linked to Iranian networks. The latest case adds to scrutiny of the stablecoin issuer’s authority to blacklist and freeze tokens at its discretion.

As of the filing date, Tether had not issued a public statement responding to Conduit’s allegations.