Payment Platform Challenges Tether's Unilateral Asset Freeze in Federal Court
Conduit Technology filed a lawsuit against Tether in New York federal court, claiming the stablecoin issuer froze $2.76 million in USDT held in the company's treasury wallet without legal justification or explanation. The freeze occurred on September 24 after Tether identified a connection between Conduit's wallet and two Brazilian companies under federal investigation, though Conduit disputes Tether's authority to take such action. The case highlights tensions over whether stablecoin issuers can unilaterally restrict access to customer funds based on their own risk assessments.
Conduit Technology began accumulating USDT reserves in May 2025 as part of its cross-border payments infrastructure, establishing what it considered a secure digital treasury. The September freeze occurred after Tether's compliance team identified links between Conduit's wallet and two entities—Bull Intermediação de Negócios and Onix—that had become subjects of Brazilian federal police activity. Conduit contends that Tether made these associations unilaterally and applied the restriction without providing any documented legal grounds or formal notice process.
This case is not Tether's first instance of restricting token access. Earlier litigation involved Thai nationals whose $42.4 million in USDT was frozen following an informal inquiry from U.S. Homeland Security Investigations, with a seizure warrant later issued. Tether has also publicly disclosed freezing $550 million in USDT tied to Iranian entities during 2025. These actions underscore the technical capability stablecoin issuers possess to block blockchain addresses at will.
The dispute raises fundamental questions about custodial control and asset rights in cryptocurrency finance. If stablecoin issuers can restrict funds based on internal risk assessments without formal legal process, users may face uncertainty about fund accessibility and businesses could encounter operational disruption. Conversely, issuers argue such measures combat financial crime and sanctions evasion. The outcome could influence how financial institutions structure stablecoin holdings and whether regulatory frameworks emerge to define permissible freeze conditions.