Conduit Technology has filed a lawsuit against Tether, the company behind the USDT stablecoin, after Tether froze $2.76 million of its funds for more than a year. Conduit says Brazilian police never asked Tether to freeze its treasury wallet, and it wants the money back.
How the freeze happened
Tether's financial crime unit selected Conduit's treasury wallet address using criteria it hasn't explained. The company hasn't said what triggered the freeze or what those criteria were. Conduit says it wasn't told why its funds were locked, and that the freeze has lasted over a year.
Conduit's complaint centers on a simple claim: Brazilian law enforcement never requested the freeze. If police didn't ask for it, Conduit argues, Tether had no basis to hold the money. The lawsuit doesn't say whether Conduit has tried to resolve the matter directly with Tether before going to court.
The police request that wasn't
Conduit's filing states that Brazilian police never contacted Tether about its treasury wallet. That's the heart of the dispute. Tether has frozen USDT before at the request of law enforcement, but Conduit says that didn't happen here. The company points to Tether's own financial crime unit as the decision-maker, not any external authority.
Tether hasn't publicly responded to the lawsuit. The company has previously said it cooperates with authorities and freezes funds when legally required. It hasn't commented on whether it considers the Conduit freeze a mistake or a justified action.
What Conduit wants
Conduit is asking for the return of the $2.76 million, plus any other relief a court deems appropriate. The lawsuit doesn't specify damages beyond the frozen amount. Conduit has also asked for information about why its address was flagged in the first place.
The case raises questions about how Tether decides which wallets to freeze. Tether's terms of service allow it to freeze funds, but the company has broad discretion in how it applies that power. Conduit's lawsuit challenges that discretion, arguing that a freeze without a police request goes beyond what Tether should be allowed to do.
The broader fight over stablecoin freezes
Stablecoin issuers like Tether can freeze tokens because they control the smart contracts behind them. That power has helped law enforcement recover stolen funds, but it's also drawn criticism from users who say it's opaque. Conduit's case is one of the few to reach a courtroom over a freeze that allegedly had no law enforcement backing.
For now, the $2.76 million remains frozen. Conduit's lawsuit is pending, and Tether hasn't said how it will respond. The outcome could hinge on whether Tether can show it had a valid reason to flag Conduit's wallet — or whether a court agrees that the freeze was unjustified.
Conduit hasn't said when it expects a ruling. Tether hasn't filed a public response. The next step is a court schedule that hasn't been set.
