Conduit attack Tether: $2.76 million of USDT frozen in New York justice

Frozen on September 24, 2025 and never returned. Conduit, a cross-border payments company, filed a lawsuit against Tether on October 5 in federal court for the Southern District of New York. She claims $2.76 million in USDT, blocked for more than a year in her cash wallet. The issuer of the stablecoin, a cryptocurrency backed by the dollar, does not hide its taste for freezes, including the largest in its history. This time, he must explain it to a judge.

Conducted against Tether: what the complaint says

According to The Block, Conduit claims that Tether froze its cash wallet without explanation or justification, depriving it of operational funds for over a year. The blockage is believed to be linked to an investigation by the Brazilian federal police targeting Onix Intermediações, a former client of Conduit.

Conduit maintains that the Brazilian federal police never flagged his wallet. Onix reportedly stopped using the platform on April 22, 2025, before the wallet was created on May 20, and its funds never entered it. “Conduit owes nothing to Tether and has no obligation towards it,” the plaintiff writes.

Freezing USDT: who decides, and on what basis?

According to the complaint, the decision comes from Tether's T3 Financial Crime Unit. The investigators would have sent a list of addresses, and the unit would have chosen which ones to freeze according to its own criteria. In other words, according to Conduit, the issuer judges alone.

Conduit raises four complaints:

conversion,

unjust enrichment,

breach of fiduciary duty,

computer fraud.

It seeks unfreezing, at least $2.76 million in damages, and restitution of profits from reserves backed by frozen USDT. These points remain allegations. No response from Tether is reported by The Block or other crypto media.

Counterparty risk: USDT can freeze without notice

For a company, counterparty risk refers to the failure of the person holding your funds. With a stablecoin, it includes the unilateral decision of the issuer. Conduit assures that the blockage has led to layoffs and office closures due to lack of working capital.

According to the complaint, the wallet, created on May 20, 2025, had processed more than $1.1 billion in volume in approximately four months before the freeze, across 4,427 transactions and 78 counterparties, none with Onix. For a treasurer, the lesson is accounting: capping balances held in USDT and spreading them across multiple addresses limits exposure to a single switch.