Conduit Sues Tether Over Frozen $2.8M in USDt Funds

Conduit has taken legal action against Tether, accusing the world's largest stablecoin issuer of freezing approximately $2.8 million in USDt held in a Conduit wallet — offering no adequate explanation for the action, according to the lawsuit.

The complaint centers on funds that Tether allegedly locked in connection with a probe launched by Brazilian authorities in 2024. Conduit contends that the freeze was carried out without proper justification, leaving the company unable to access its own assets and effectively cutting off its liquidity.

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The case highlights a growing tension in the crypto industry between stablecoin issuers' broad ability to freeze wallet addresses and the rights of businesses that depend on those assets for daily operations. Tether, which controls billions in circulating USDt, has previously cooperated with law enforcement agencies globally to freeze wallets suspected of illicit activity — but critics argue the process lacks transparency and due process protections.

For Conduit, the stakes are concrete: $2.8 million in frozen stablecoins represents a significant operational disruption, and the lawsuit signals that companies are increasingly willing to challenge Tether's unilateral freezing power in court. The outcome could set a meaningful precedent for how stablecoin issuers are required to communicate with and respond to wallet holders when assets are locked at the request of foreign authorities.

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