Cross-border payments platform Conduit Technology has initiated legal action against stablecoin issuer Tether, alleging that the company froze $2.76 million in USDt without any legal justification or explanation in September 2025.
According to a complaint filed in the US District Court for the Southern District of New York on Monday, Conduit claims that Tether seized funds belonging to the corporate treasury to which it possesses no legal entitlement and no legitimate claim. The legal dispute sheds light on the growing tensions surrounding the centralized administrative powers held by stablecoin issuers and the operational risks businesses face when utilizing digital assets for corporate treasury management.
In its court filing, Conduit stated that it began holding USDt as an integrated component of its digital treasury wallet operations in May 2025. However, the operational stability of the firm was severely disrupted when Tether abruptly froze the entirety of the company’s $2.76 million stablecoin holding in September. Conduit characterized the action as entirely unjustified and argued that the sudden freeze has materially impacted its ongoing business operations, hindering its ability to execute cross-border transactions and manage its corporate liquidity effectively.
"The funds are unequivocally Conduit’s, but Tether has taken them and is denying Conduit access to them," alleged representatives for Conduit in the official court complaint. The company further emphasized the broader implications of the issuer’s actions for corporate cryptocurrency holders, adding that Tether is not permitted to take money from businesses simply because those entities chose to store their capital in Tether’s proprietary digital currency.
The origins of the freeze, as detailed in the lawsuit, trace back to a broader international law enforcement inquiry. According to the legal documents, the freezing action was connected to a Brazilian federal police investigation that was originally launched in 2024. This investigation targeted specific financial intermediaries, namely Bull Intermediação de Negócios and Onix. Tether allegedly identified Conduit’s treasury wallet as being tangentially tied to these targeted corporate entities.
Crucially, the lawsuit contends that Tether made this association "on its own initiative using its own criteria," proceeding to freeze the $2.76 million on September 24, 2025, without securing a formal judicial seizure order directly involving Conduit or providing prior notice to the payments platform.
Conduit asserted in the complaint that it made repeated attempts to resolve the matter directly with Tether, reaching out multiple times to request that the frozen funds be released and restored to the company’s control. Despite these ongoing communications, Tether had not unfrozen the funds as of Monday. When contacted for comment regarding the specifics of the lawsuit and the allegations made by Conduit, representatives for Tether did not provide an immediate response.
This high-profile legal challenge against the dominant stablecoin issuer is part of a broader wave of legal scrutiny regarding Tether’s administrative asset-freezing practices. The lawsuit filed by Conduit comes approximately one month after a separate legal action was brought against Tether by two Thai nationals. In that case, the plaintiffs sued Tether for allegedly freezing $42.4 million in USDt following what they described as an "informal request" originating from US Homeland Security Investigations.
The funds involved in the Thai nationals’ lawsuit were allegedly tied to a $61 million "pig butchering" financial fraud case. That underlying matter was filed in the US District Court for the Eastern District of North Carolina, which had issued a formal seizure warrant for the specific USDt tokens in February. The juxtaposition of these cases highlights the complex legal and operational tightrope that stablecoin issuers navigate as they cooperate with domestic and international law enforcement agencies while simultaneously facing accountability from corporate users whose assets are immobilized during investigations.
The controversy also underscores ongoing debates within the digital asset ecosystem regarding the freezing capabilities embedded in major stablecoin smart contracts. While issuers argue that maintaining the ability to freeze illicitly obtained funds is essential for regulatory compliance, anti-money laundering efforts, and cooperation with global law enforcement, corporate users and fintech platforms increasingly voice concerns over administrative overreach. When centralized issuers act on their own criteria or informal law enforcement requests, innocent market participants and legitimate businesses risk collateral damage, sparking a new frontier of litigation centered on digital property rights, corporate due process, and the custody of tokenized assets.
As the legal proceedings in the US District Court for the Southern District of New York move forward, the case is expected to draw close attention from regulatory compliance experts, legal scholars, and cryptocurrency market participants alike. The outcome could potentially influence how stablecoin issuers handle third-party asset freezes and what evidentiary standards or judicial processes must be satisfied before freezing corporate treasury funds associated with external investigations.
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