Conduit has filed a lawsuit against Tether in New York federal court, alleging the stablecoin issuer froze $2.76 million of its funds for more than a year without explanation. The suit claims Tether has no legal right to hold the money and seeks its release.
According to the complaint, the funds were frozen in a move that Conduit says lacked any stated justification. The company argues that Tether's actions have deprived it of access to its own capital for an extended period, causing financial harm.
The freeze and the lawsuit
The lawsuit, filed in the Southern District of New York, centers on Tether's decision to freeze Conduit's funds. Conduit alleges the freeze has lasted over a year, with no clear reason provided by Tether. The complaint asserts that Tether has "no legal entitlement" to the funds and that the continued retention is unlawful.
Details about why Tether froze the assets remain unclear from the public filings. Tether has not publicly commented on the suit, and no court ruling has been issued yet.
What Conduit wants
Conduit is seeking the return of the $2.76 million plus any additional damages. The company claims it has suffered financial losses due to the inability to use the funds, though the exact amount of damages sought beyond the principal sum was not specified in the facts available.
The case highlights ongoing scrutiny over how stablecoin issuers handle customer assets, particularly when freezing funds. Tether, the largest stablecoin by market capitalization, has faced similar legal challenges in the past, but this suit focuses on a specific instance of frozen funds.
Tether's response and next steps
Tether has not yet filed a response to the complaint. The case will proceed in the federal court in New York, where both parties will present their arguments. A judge will ultimately determine whether Tether's freeze was justified and whether Conduit is entitled to recover the funds.
For now, Conduit's money remains frozen, and the legal battle is just beginning. The outcome could set a precedent for how stablecoin issuers handle disputed funds in the future.
