Conduit has filed a lawsuit against Tether, the company behind the USDT stablecoin, after Tether froze $2.8 million in USDt held in a Conduit wallet. The freeze happened without any explanation to Conduit, according to the complaint. The wallet in question is tied to a 2024 investigation by Brazilian authorities.
What Conduit says happened
Conduit says Tether froze the funds without telling the company why. The lawsuit, filed in court, seeks to recover the $2.8 million. Conduit claims the wallet was linked to an investigation launched by Brazilian authorities in 2024. That investigation is the only publicly known connection between the wallet and any legal action.
Tether has not publicly commented on the lawsuit. The company has a history of freezing USDT in response to law enforcement requests, but the facts here don't show that Tether provided any such request to Conduit.
The Brazilian investigation connection
Brazilian authorities opened an investigation in 2024. The Conduit wallet that held the frozen USDT was tied to that probe. What exactly the investigation is looking into isn't clear from the facts. Conduit’s lawsuit doesn't say whether the company itself is a target of the Brazilian investigation or just the wallet.
That distinction matters. If Conduit is not a target, the freeze could be seen as collateral damage. If it is, Tether might argue it was cooperating with authorities. The lawsuit will likely hinge on what Tether knew and when.
Tether’s track record with freezes
Tether has frozen USDT before, usually at the request of police or regulators. The company has touted its ability to blacklist addresses tied to crime. But Conduit’s suit challenges that practice when the wallet owner says it got no notice.
There’s no public record of Tether explaining this specific freeze. The company’s terms of service allow it to freeze funds, but the lawsuit argues that doesn’t mean it can do so without cause or communication.
What Conduit wants
Conduit is asking for the $2.8 million back. The lawsuit doesn’t specify other damages in the facts provided. It also doesn’t name any individual Tether executives.
The case could set a precedent for how stablecoin issuers handle law enforcement requests, especially when multiple jurisdictions are involved. Brazil’s investigation adds a cross-border layer that U.S. courts will have to untangle.
Next steps in the lawsuit
Tether has not yet filed a response. The court will likely schedule a hearing in the coming weeks. Conduit’s legal team will need to show that the freeze was wrongful, while Tether may argue it was complying with the Brazilian investigation.
For now, the $2.8 million stays frozen. Conduit wants it back, and Tether hasn’t said why it won’t return it.
