There have always been questions surrounding Tether and Circles stablecoin freezing decisions about a situation where they freeze coins of innocent business owners or citizens who are just suspected or don't have anything link associated with a terrorist group, or any form of crime that should warrant their assets freezing.
Conduit pay, which is legally known as Conduit Technology Inc, just filed a lawsuit against tether over its frozen asset that tether has refused to give an appropriate reason for that action, according to them, and the case, which was being investigated by the Brazilian government have nothing to do with frozen wallet neither did Brazilian authority asked them to freeze the companies' wallet which is also said to be created after Onix Intermediações have left their platform.
I'm curious to see how this case is going to end as this is the first of its kind. I have seen an entity not only challenging a tether over their frozen asset, but they are also demanding compensation equal to the frozen amount as they claim the tether has made interest off it over the period it's locked in their hand.
The freeze allegedly stems from an investigation sent to the Brazilian Federal Police involving Onix Intermediações, a former Conduit customer.
However, Conduit says law enforcement confirmed it never flagged the payment provider's treasury wallet for freezing and doesn't know why Tether took action against it. It also says a Brazilian court confirmed that Conduit was not under investigation in the case involving Onix Intermediações.
According to the filing, Conduit says Onix has not used its platform since April 2025, roughly a month before the treasury wallet was created, and says the wallet never held any of Onix's funds.
Because the wallet was being used to support its operations, Conduit says its business has suffered, while Tether continues to collect interest on the reserves backing the blocked USDT.
The suit is asking not only for Tether to release the $2.76 million in frozen funds, but also for another $2.76 million on top of this in additional damages and profits it says Tether has earned on the reserves.
PDF link to the compliant:
ECF CASE (Civil Case No.:1:26-cv-08773) 
