Conduit sues Tether over $2.76M frozen USDT: ‘No justifiable basis to withhold money’
Tether is facing increased regulatory pressure on its USDT freezes.
Tether is in the news today for freezing funds of Conduit, a U.S.-based payment firm.
According to the lawsuit filed with the Southern District of New York (SDNY), Conduit alleged that Tether froze its $2.7M USDT with “no justifiable basis.”
Conduit has asked Tether to return the funds—or to even provide a purported justification for Tether’s improper taking. Tether has refused to do either. Tether has no justifiable basis to take and withhold Conduit’s money from it, and Conduit has been harmed as a result.
According to Conduit, Tether continues to profit from the alleged “unjustifiable freeze” by earning interest income on the reserve assets backing the $2.76M USDT.
Conduit’s claims against Tether
Conduit noted that Tether froze the funds on the 24th of September, 2025. According to the payment firm, Tether referred them to the Brazilian Federal Police for details on the seizure.
However, Conduit claimed that the Brazilian authorities denied ordering the stablecoin issuer to freeze its funds.
Worth pointing out that the payment firm acknowledged that there was an ongoing investigation into Onix transfers using the Conduit platform. As a result, Brazilian authorities ordered Tether to freeze some of these funds.
Analysts flagged that 23 Tron addresses were indeed frozen on the 24th of September. The said Conduit wallet, holding $2.7M USDT, was one of them and has never been unfrozen.
But Conduit defended the wallet as a treasury wallet that was formed a month after Onix’s last transaction on the platform.
Reacting to the same, Taylor Monahan, a prominent security and blockchain expert, said,
I think Brazilian authorities have their wires crossed on what they demanded be frozen and/or isn’t communicating with Conduit well.
Monahan added,
Or Conduit is choosing to be selective with their portrayal of the situation to US courts in order to try to get their address unfrozen without dealing with the Brazilian situation head-on.
This is the second lawsuit against Tether in less than two months. And both involve those who are under investigation. Last month, a duo sued Tether for $42.4M in frozen USDT and demanded all the earned interest income plus the initial capital.
In late September, the U.S. Senate released a damning report, claiming Tether’s USDT is a key enabler of Iran’s illicit crypto flows. In its defense, Tether said it had frozen over half a billion dollars tied to the Iranian regime.
Tether’s USDT is the world’s largest stablecoin, with $184B in market supply. But it’s unclear whether the ongoing regulatory pressure and scrutiny will reduce its global dominance.
Final Summary
- Payment firm Conduit has sued Tether for freezing $2.76M in USDT funds and illegally earning interest income on it.
- Tether is also facing growing scrutiny from the U.S. Congress over Iranian illicit crypto flows.
