Conduit filed a lawsuit on October 5, 2026, in the U.S. District Court for the Southern District of New York alleging Tether froze $2.76 million USDT in September 2025 without explanation and refused to release the funds for over a year. Thai businessmen sued Tether on August 31, 2026, over $42.4 million in frozen USDT. Tether has helped freeze over $4.4 billion in assets linked to suspected crime across 340 law enforcement agencies in 65 countries.
Conduit lawsuit details
- ▪Conduit filed a lawsuit against Tether over a $2.76 million USDT freeze on October 5, 2026, in the U.S. District Court for the Southern District of New York
- ▪Conduit is represented by law firm Baker Botts in its Oct. 5, 2026, lawsuit against Tether
- ▪Conduit moves money across more than 100 countries using stablecoins including USDT and Circle's USDC
- ▪Conduit is seeking $2.76 million in damages and profits in addition to the release of the $2.76 million USDT frozen by Tether
- ▪Conduit's Oct. 5, 2026, lawsuit names four Tether entities as defendants: Tether Holdings, Tether International, Tether Operations, and Tether Investments
Tether wallet freeze rationale
- ▪Onix Intermediações stopped using Conduit's platform in April 2025, roughly a month before Conduit's treasury wallet was created
- ▪A Brazilian court found Conduit was not under investigation in the Onix Intermediações matter
- ▪Tether froze Conduit's treasury wallet for more than a year as of October 6, 2026
- ▪The Tether freeze of Conduit's wallet on Sept. 24, 2025, traces back to a case referred to Brazil's Federal Police involving Onix Intermediações, a company Conduit once served
- ▪Conduit's frozen treasury wallet never held any of Onix Intermediações's money
Thai businessmen lawsuit
- ▪Tether blacklisted Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas's 10 Ethereum addresses on October 30, 2025, following an informal U.S. law-enforcement request
- ▪A magistrate judge signed a seizure warrant for Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas's frozen USDT on February 19, 2026, nearly four months after Tether blacklisted their addresses
- ▪Thai businessmen Nutthawat Rukthammachalern and Natthawat Kasamvilas sued Tether on August 31, 2026, over about $42.4 million in frozen USDT across 10 Ethereum addresses
Tether reserve profit incentive
- ▪A frozen Tether wallet costs Tether nothing while Tether continues collecting yield on the reserves backing the frozen tokens
- ▪Plaintiffs in Conduit's and the Thai businessmen's lawsuits against Tether argue that Tether's ability to earn interest on frozen funds creates a financial incentive to freeze and hold wallets
- ▪Tether backs its reserves with interest-bearing instruments, mostly U.S. Treasuries
Regulatory scrutiny
- ▪Tether has helped freeze over $4.4 billion in assets linked to suspected crime
- ▪New York Attorney General Letitia James and Manhattan District Attorney Alvin Bragg told Congress in February 2026 that the GENIUS Act lets stablecoin firms profit from fraud by keeping funds and interest rather than returning money to victims
- ▪A Senate subcommittee led by Richard Blumenthal asked the Treasury and the DOJ on September 28, 2026, to investigate Tether's sanctions and anti-money-laundering compliance
- ▪A Senate subcommittee found that 84% of 846 Iran-linked wallets transacted almost entirely in USDT
- ▪Tether and TRON run a joint enforcement arm called the T3 Financial Crime Unit that has supported Brazilian Federal Police work
- ▪Tether cooperates with more than 340 law enforcement agencies across 65 countries
Perspective of Plaintiffs suing Tether (Conduit and Thai businessmen)
- ▪A frozen Tether wallet costs Tether nothing while Tether continues collecting yield on the reserves backing the frozen tokens
- ▪Plaintiffs in Conduit's and the Thai businessmen's lawsuits against Tether argue that Tether's ability to earn interest on frozen funds creates a financial incentive to freeze and hold wallets
Debatable claims
- ▪Tether's freeze of Conduit's wallet was unjustified given law enforcement clearance
- ▪Lawsuits against Tether interfere with legitimate law enforcement cooperation
- ▪Tether's ability to earn interest on frozen funds creates improper financial incentives
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