Stable Money, Arbitrary Power: Tether’s Accountability Test, by Fransiscus Nanga Roka

A digital dollar that maintains its price but locks you out of your cash could still kill a company. Stability is irrelevant when it is theIssuer that decides whether or not the owner can spend it.

Case 1:26-cv-08773, Conduit Technology v. Four Tether entities (New York Northern District) Cross Border Payments Company CONDUIT TECHNOLOGY had filed a lawsuit case in a Manhattan federal court against four Tether entities, on October 5th. The follow-up claims that Tether froze $2.76 million in Conduit’s USDT treasury wallet on September 24, 2025 and then left it inaccessible for over a year. According to the company, the wallet is separate working capital from wallets for customer transactions.

US media articles based on the complaint said that the freeze was linked to a Brazilian investigation tied to Bull Intermediação de Negócios and Onix. Conduit claims Tether used its own baseless criteria to flag its wallet and repeatedly denied it access. Cointelegraph has not received an immediate response from Tether. These are allegations not rulings.

The lawsuit, as reported, allegedly alleges conversion and unjust enrichment and claims related to breach of fiduciary duty and computer-fraud. The outcome of those allegations depends on the facts, current contracts and legal relationship between the parties—not just public outrage.

But the governance question is pressing: how long can a private issuer continue to freeze another person’s operating capital without remedy?

In its response, Tether champions freezing as a critical weapon in the battle against illicit finance and says it regularly collaborates with law enforcement. This ability can be used to safeguard victims and prevent the wasted stolen funds. Already an emergency intervention and an indefinite restraint require differing protections. We should be more justified and review a freeze the longer it lasts.

This would reveal that there is a gaping chasm between technical control (which may be impermeable) and accountable authority (which can’t be always). The ability to disable tokens should not determine whether disabling them is the right thing to do.

And a private settlement should not automatically be classified as a constitutional violation of due-process rights either. The real policy challenge is to create protections that can be implemented on private payment infrastructure.

Regulators should mandate issuers to record the basis for each freeze: a legal obligation, an official request, a contractual provision or a risk self-identified. It should be unambiguous about those grounds.

Owners impacted, ought to be notified shortly and with credible reasons wherever disclose is permitted. Confidential independent review must therefore still be available where full disclosure is not possible due to the need for investigative secrecy. Secrecy needs supervision.

Emergency freezes ought to be quickly re-evaluated in the next weeks, with regular reviews and escalate by a certain deadline. Ongoing restrictions should necessitate a rationale that is justified and documented in the present. Administrative inertia, however should never fill in for evidence.

Issuers need a practical way to correct incorrect wallet attribution, submit evidence and have their submissions adjudicated independently. In addition, access to relevant decision records is encouraged for courts and regulators as long as it does not interfere with legitimate investigations.

When a freeze is found to be wrongful, remedies should include release and compensation for provable losses but only to the extent legally recoverable. Reserve profits allegations need to be tested, but their distribution should not be presumed.

For stablecoins to be considered operational cash, businesses also require contingency liquidity, diverse payment channels and a clear understanding of issuer-control risk.

The court must address the claims by Conduit. Policymakers should act on the more pervasive vulnerability right now.

An effective digital-dollar system needs to buy-off prevention from financial crime and unwarranted deprivation. Otherwise, the token price is described as “stable” and the owner rights as dangerously unknown.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia