Cross-border payments firm Conduit has sued Tether in U.S. federal court, alleging the stablecoin issuer froze $2.76 million of its USDT more than a year ago and still won't explain why. The suit says the frozen wallet never belonged to the Brazilian probe Tether has cited, and that Tether keeps earning interest on the reserves behind the locked tokens.
Conduit filed its complaint in the U.S. District Court for the Southern District of New York on Oct. 5, case number 1:26-cv-08773. The suit brings claims for conversion, unjust enrichment, breach of fiduciary duty and computer fraud, and asks the court to restore access to the wallet and award at least $2.76 million in damages.
A freeze tied to someone else's case
Tron transaction logs show the USDT contract blacklisted the wallet on Sept. 24, 2025. Conduit says the wallet was only created on May 20, 2025, nearly a month after a former customer, Onix Intermediações, last used its platform on Apr. 22, 2025, and that it never held any Onix funds.
Brazilian Federal Police, who were investigating entities tied to Onix, told Conduit the treasury wallet was not on the list of addresses they had supplied to Tether and that they did not know the criteria Tether used to select it. Conduit says Tether's own T3 Financial Crime Unit flagged the wallet independently.
Business fallout and a second freeze suit
Conduit says the wallet had processed more than $1.1 billion in volume over roughly four months before being locked, and that the resulting liquidity hit forced layoffs and office closures. Tether continues to earn interest on the reserves backing the frozen tokens, according to Decrypt: "reaping the financial rewards" of the freeze at no cost to itself.
Its frozen balance still stood at an approximate 2.757 million USDT as of Oct. 6, 2026, reflecting a separate 1 million USDT transfer that arrived later the same day the blacklist took effect. The case follows an Aug. 31 complaint from two Thai businessmen challenging a roughly $42.4 million USDT freeze, adding to mounting scrutiny of Tether's power to freeze USDT at will.
Sources: Decrypt, The Defiant
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