Payments Firm Says Tether Froze $2.76 Million Brazilian Police Didn’t Flag, Forcing Layoffs

Tether froze $2.76 million of a payments company’s working capital though the Brazilian police investigation behind the freeze never named its wallet, Conduit Technology alleges in a lawsuit filed in Manhattan federal court.

The wallet has been frozen since Sept. 24, 2025, according to the complaint, filed Oct. 5 in the Southern District of New York. Tether has never released the money or explained the freeze, Conduit says, and pointed the company to Brazilian police when it asked.

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The freeze came during a Brazilian Federal Police investigation into people and companies tied to Bull Intermediação de Negócios, which the complaint describes as “a financial intermediary that shares common ownership with Onix.” Onix Intermediações last used Conduit’s platform on April 22, 2025, before Conduit opened the wallet in May, the filing says.

According to the suit, a July 2026 police filing laid out how the freezes worked: investigators sent a list of suspect addresses to Tether’s T3 Financial Crime Unit, and the unit decided which wallets to freeze using its own criteria. Conduit says its wallet was not on the police list, and that the Brazilian criminal court has recognized Conduit is not a target.

“Tether has thus acted on its own initiative to freeze and seize control of Conduit’s funds, based on its own undisclosed criteria,” the complaint says.

Conduit says the wallet held working capital it used to pre-fund client payments, calling it in the complaint “the digital equivalent of the company’s operating bank account.” It says losing the money cut its volume and forced layoffs and office closures. In about four months before the freeze, the wallet moved more than $1.1 billion across 4,427 transactions and 78 counterparties, none involving Onix, according to the complaint.

Two Thai businessmen sued Tether in the same court on Aug. 31 over about $42.4 million frozen in October 2025 at what they describe as the “informal request of a U.S. government agent,” months before a seizure warrant was issued.

Tether has not publicly addressed Conduit’s suit. CEO Paolo Ardoino said in a Sept. 28 company release on its Iran-related freezes that “Tether can act when credible information is provided by law enforcement.” The release came the same day Sen. Richard Blumenthal asked Treasury and the Justice Department to investigate Tether’s sanctions compliance.

Conduit wants the court to order the wallet unfrozen and award at least $2.76 million in damages, the interest Tether has earned on reserves backing the frozen tokens, and punitive damages. An Aug. 19 demand letter drew no reply, it says.

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