Conduit sues Tether over $2.76 million freeze, says it has ‘no legal entitlement’ to funds

Cross-border payments firm Conduit is suing USDT issuer Tether, alleging it froze $2.76 million of Conduit's funds and is refusing to release them or give any explanation for the freeze.The complaint was filed Monday in the Southern District of New York, with Conduit saying it has been locked out of the USDT for more than a year."Conduit owes no money to Tether and has no obligation to Tether," the filing reads.Conduit uses stablecoins, including Tether's USDT and Circle's USDC, to move money across more than 100 countries. The lawsuit says the particular wallet frozen by Tether was the "equivalent of [Conduit's] operating bank account."The freeze allegedly stems from an investigation sent to the Brazilian Federal Police involving Onix Intermediações, a former Conduit customer.However, Conduit says law enforcement confirmed it never flagged the payment provider's treasury wallet for freezing and doesn't know why Tether took action against it. It also says a Brazilian court confirmed that Conduit was not under investigation in the case involving Onix Intermediações.According to the filing, Conduit says Onix has not used its platform since April 2025, roughly a month before the treasury wallet was created, and says the wallet never held any of Onix's funds.Because the wallet was being used to support its operations, Conduit says its business has suffered, while Tether continues to collect interest on the reserves backing the blocked USDT.The suit is asking not only for Tether to release the $2.76 million in frozen funds, but also for another $2.76 million on top of this in additional damages and profits it says Tether has earned on the reserves.