Tether says it has almost no money tied up at EQIBank, the Dominica-licensed lender whose assets were seized by U.S. authorities on Thursday. The stablecoin issuer’s exposure amounts to less than 0.034% of its total assets, according to a statement sent to CoinDesk via email.
The seizure reportedly affected about $89 million, or 80% of EQIBank’s monetary holdings, according to reports by the Financial Times and The Information. That figure puts EQIBank at risk of liquidation, per FT. Tether’s own assets at EQIBank sit below the $64 million mark, based on the company’s reported $187.75 billion in group assets.
“Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice,” a Tether spokesperson told CoinDesk via email. The statement also noted that assets held at EQIBank were limited to “less than 0.034% of the assets of the group.” The case against Capstone remains unresolved. Tether has not disclosed the exact dollar amount of its exposure.
The seizure itself
U.S. prosecutors seized money from Capstone accounts at Wells Fargo and JPMorgan Chase, according to court filings. The seizure targeted roughly $89 million, or 80% of EQIBank’s monetary holdings, according to FT. That figure suggests the lender’s remaining balance is small enough that a second round of seizures could push it toward liquidation.
The action was taken as part of a civil forfeiture case. Prosecutors allege that Capstone misrepresented its business to banks. EQIBank used Capstone to hold funds and move customer money through those accounts, per the filings. The seizure affects about $89 million, or 80% of EQIBank’s monetary holdings, according to FT. That figure puts EQIBank at risk of liquidation, per FT.
What Tether actually said
Tether’s response was swift and specific. The company did not deny the seizure or dispute the figures. Instead, it framed its position as one of ignorance.
“Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice,” the spokesperson said. The statement also noted that assets held at EQIBank were limited to “less than 0.034% of the assets of the group.”
The company did not disclose the exact dollar amount of its exposure. The statement leaves the precise figure unknown.
The bank’s role
EQIBank provided banking services to Tether, including processing wire transfers linked to purchases and redemptions of USDT. A bank that processed USDT transactions for Tether is now caught in legal trouble.
The seizure also raises questions about how Tether chose its counterparties in the first place. A bank that misrepresented its business to major U.S. banks was handling Tether’s money. That is a problem for any stablecoin issuer, and it is a problem that Tether has acknowledged only in passing.
The broader picture
The disclosure does not suggest an immediate threat to USDT’s reserves or dollar peg. But it highlights the counterparty risk in the network of banks that help stablecoin issuers process customer deposits and redemptions.
Every stablecoin relies on banks to move money around. Those banks can fail, and when they fail, the stablecoin issuers who trusted them have to figure out what happens next. Tether has acknowledged the exposure is minimal, and it has said the seizure poses no immediate threat to its reserves or its peg.
That is the public line. Whether it holds up depends on what comes next.
What happens next
The case against Capstone remains unresolved. EQIBank says it faces liquidation, and that is a serious matter for any institution holding money.
Tether has not said whether it plans to move its remaining assets out of EQIBank. It has not said whether it will seek compensation for any losses. It has not said whether it will change its banking arrangements as a result of this seizure.
What it has said is that the exposure is small. That is the entire argument.
The takeaway
Tether’s statement is a relief valve. It tells investors that the seizure is not a systemic threat, and it tells regulators that Tether was not complicit. The company’s assets are safe, at least for now, and its peg is intact.
But the underlying problem is not solved. Stablecoin issuers rely on banks, and banks fail. When a bank fails, the stablecoin issuer has to clean up. Tether has acknowledged the exposure is minimal, and it has said the seizure poses no immediate threat to its reserves or its peg.
The seizure is a bump in the road, not a cliff. Tether has the resources to weather it, and it has the transparency to explain why. The question is whether the stablecoin industry learns from this episode. Banks will fail again, and when they do, the issuers who trusted them will have to answer for it.
Key facts
- Exposure: Less than 0.034% of Tether’s total assets, or roughly $64 million based on its reported $187.75 billion in group assets
- Seizure amount: About $89 million, or 80% of EQIBank’s monetary holdings
- Banking partners: EQIBank used Capstone, a U.S. payment processor, to hold funds in accounts at Wells Fargo and JPMorgan Chase
- Risk: Counterparty risk in fiat gateway networks, not an immediate threat to USDT’s reserves or dollar peg
- Status: EQIBank faces liquidation, according to FT; Tether has minimal exposure and no immediate threat to its reserves or peg
The seizure is a bump in the road, not a cliff. Tether has the resources to weather it, and it has the transparency to explain why. The question is whether the stablecoin industry learns from this episode.
Source material: “Tether confirms minimal EQIBank exposure following $89M US asset seizure,” CoinDesk.
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