The complaint says $2.76 million has sat frozen in the payments firm's operating wallet since September 2025 over a Brazilian investigation that Brazilian police say never flagged it. It follows a $42.4 million claim brought on much the same theory five weeks earlier.
Conduit Technology asked a federal judge on Monday to rule that Tether had no legal right to freeze $2.76 million of USDT belonging to the cross-border payments firm, to order the tokens released, and to award damages of at least the frozen sum. The complaint was filed in the U.S. District Court for the Southern District of New York against four Tether entities.
Conduit moves money through stablecoins across more than 100 countries. The wallet Tether blacklisted was the account the business ran on, according to the complaint as reported by The Block. The freeze dates to September 24, 2025, TFTC reported, which leaves the balance immobile for more than a year.
A blacklisted address cannot send or receive USDT. The tokens stay where they are and simply cannot be moved, which is what makes the mechanism useful to law enforcement and what makes it hard to contest. The complaint describes no process for taking the matter up with Tether directly. Conduit's route was a lawsuit.
The blacklisting followed a Brazilian Federal Police investigation into Onix Intermediações, a company that had been a Conduit customer, and was carried out by Tether's T3 Financial Crime Unit, according to the complaint. Conduit's answer to that is a chronology. Onix stopped using its platform in April 2025, about a month before the frozen treasury wallet was created on May 20, 2025, and never held funds in it. The complaint says Brazilian police confirmed they had never flagged the wallet and that a Brazilian court confirmed Conduit was not under investigation in the Onix matter.
"Conduit owes no money to Tether and has no obligation to Tether," the complaint reads. It asks for four things: a declaration that Tether lacked the authority to freeze the tokens, an order unfreezing them, compensatory damages of at least $2.76 million, and consequential damages covering the profits Tether earned on the reserves backing the frozen balance. The Block puts that second damages figure at a further $2.76 million, which would bring the claim to roughly $5.5 million if a court granted it in full.
The reserve-profits claim is the part of the case with reach beyond Conduit. A frozen USDT token still exists and still counts toward supply, and the assets backing it keep earning for the issuer while the holder can do nothing with the token itself. Conduit's unjust enrichment count asks a court to treat that yield as money it is owed. Who is entitled to the return on stablecoin reserves is already a live question for regulators, and at least one has moved to settle it in the issuer's favor: Singapore's central bank has proposed barring interest on every stablecoin it licenses.
The suit arrives five weeks after a similar one. Two Thai businessmen sued Tether on August 31 over $42.4 million held across ten Ethereum addresses that were blacklisted in October 2025 after an informal law enforcement request, with a seizure warrant following in February 2026. Tether called that case "a baseless attempt to interfere with Tether's important work with global law enforcement," according to Cryptopolitan.
Neither complaint alleges that a court had ordered the freeze when it happened. That is the thread between them. In the Thai case the warrant arrived nearly four months after the addresses were blacklisted, which shows the blacklisting can come first and the judicial authorization later. TFTC's report of the complaint says no court order underlies the freeze in Conduit's case at all.
The two suits differ in what they are arguing about. The Thai plaintiffs are contesting a freeze that a U.S. agency eventually backed with a warrant. Conduit is contesting one it says no authority ever asked for, against a wallet it says the investigating police force never flagged. If that account holds up, the question in front of the court is narrower than whether Tether may cooperate with law enforcement. It is what a holder can do when the cooperation reaches the wrong address.
Everything in the complaint is Conduit's account and none of it has been tested. Tether had made no public statement about the filing as of Tuesday.
