Conduit filed suit against Tether on Oct. 5 in the U.S. District Court for the Southern District of New York, seeking recovery of roughly $2.76 million in USDT that the stablecoin issuer has kept frozen in the company's treasury wallet for more than a year. Case number 1:26-cv-08773 demands restoration of access to the tokens and at least $2.76 million in compensatory damages.

The cross-border payments firm argues that Tether's technical ability to blacklist USDT addresses does not grant legal authority to withhold a counterparty's working capital. Conduit says the locked wallet held its own operating funds, not customer money, and that the freeze has cut its capacity to settle transactions at prior speed.

What does the on-chain record show?

Tron transaction logs confirm that the USDT contract added Conduit's wallet — TMk5ji4vTGZG8E1RnKEYvaK6kgNobLSTtE — to its blacklist on Sept. 24, 2025. TronScan displayed a balance of approximately 2.757 million USDT on Oct. 6, 2026. The blacklist did not block incoming transfers: a separate transaction sent an additional 1 million USDT into the wallet on the same day it was frozen, leaving funds received post-blacklist inside the address.

What is Conduit's relationship to the underlying investigation?

According to the complaint, Tether repeatedly referred Conduit to the Brazilian Federal Police or said it was following up on inquiries. Conduit alleges that police told the company its treasury wallet did not appear on the list of addresses they originally supplied to Tether, and that they did not know the criteria Tether used to select it.

The investigation concerned entities connected to a former customer, Onix Intermediações. Conduit asserts that Onix last transacted on its platform on April 22, 2025, that the treasury wallet was created on May 20, and that the wallet never held Onix funds. Those claims frame Conduit's argument that the freeze is unjustified.

How does Tether justify the freeze?

Tether's published service terms reserve the right to freeze tokens when required by law or when the company, "in its sole discretion," considers it prudent. Conduit's complaint asserts that no valid, enforceable contract between it and the defendants covers the present dispute.

The issuer has publicly defended the freeze function as a law-enforcement tool. In an April announcement, Tether said it helped freeze $344 million in USDT across two addresses in coordination with OFAC and U.S. law enforcement. That policy position does not, however, establish the legal basis for the Conduit freeze.

What claims has Conduit brought?

Conduit's complaint brings claims for:

• Conversion
• Unjust enrichment
• Breach of fiduciary duty
• Computer fraud

The complaint also requests declaratory relief and an accounting. Beyond restoring access, Conduit asks the court to compel Tether to disclose and surrender income earned on reserves attributable to the frozen tokens.

Where does this case fit in the wider litigation?

The Conduit action follows a separate Aug. 31 lawsuit filed by two Thai businessmen challenging a freeze of approximately $42.4 million in USDT. Those plaintiffs alleged Tether acted on an informal U.S. government request before a seizure warrant was obtained. Tether called that earlier lawsuit "baseless" in a statement to CoinDesk.

The Conduit complaint does not name any U.S. agency as a co-defendant or respondent. If the court grants the requested relief, Tether could be ordered to lift the blacklist, return the tokens, and disgorge associated reserve income — narrowing the issuer's discretion over frozen funds held by non-customer counterparties. The next procedural milestone will be Tether's response to the complaint, due within 21 days under the federal civil rules once service is completed.