EQIBank, which processed wires for tether purchases and redemptions, says U.S. authorities seized about $89 million from accounts at a payments firm it used. Tether says it had no knowledge of the alleged conduct.
Tether's statement on Friday was meant to show that a U.S. seizure is immaterial to its balance sheet. It also traced how the world's largest stablecoin gets dollars in and out of the banking system.
The company said its exposure to EQIBank, a Dominica-licensed bank that processed wires for purchases and redemptions of its USDT token, is "less than 0.034% of the assets of the group." It said it "had no knowledge of the conduct by Capstone alleged by the Department of Justice."
The chain
The case begins with a civil forfeiture action filed in July by federal prosecutors in the Eastern District of California against funds held by Capstone Ltd., a U.S. payments company. Prosecutors allege Capstone misrepresented the nature of its business to the banks where it held accounts, including accounts at Wells Fargo and JPMorgan Chase.
Capstone handled funds for EQIBank. EQIBank says about $89 million, roughly 80% of its monetary holdings, was seized, and that it now faces possible liquidation. EQIBank has not been accused of wrongdoing in the filings.
The path runs from Tether, to an offshore bank, to a U.S. payments firm, to two of the largest U.S. banks. A break at any link can delay the movement of money even when no reserves are lost.
The size
Tether did not give a dollar figure. Its group reported about $187.75 billion of assets for the June quarter, so 0.034% equals a ceiling of about $64 million. That is small against Tether's reserves and does not threaten USDT's backing. The token has held its dollar peg.
The issue is operational rather than a matter of solvency. Redemptions depend on banking partners willing to process large dollar flows for a crypto issuer. When one of them loses access to its own correspondent, redemptions that ran through it have to find another route.
The regulatory backdrop
The disclosure comes a day after the Federal Reserve proposed rules on capital, reserves and redemption for stablecoin issuers it supervises under the GENIUS Act. Those rules cover Fed-supervised issuers rather than Tether, but they address the same redemption plumbing that Tether's statement describes.
The court docket in the Capstone case will show whether any funds are released and on what terms. Any change in the banks Tether names as redemption partners, or in the time redemptions take, would be the practical sign of whether the loss of one link matters.