A US court fight over roughly $84 million in frozen bank accounts has pulled Tether into the spotlight, and the stablecoin issuer still has not said exactly how much of its own money is caught in the net.
The case centers on Capstone Limited, a payment processor that Dominica-registered EQIBank used to reach the US banking system. Through Capstone, EQIBank moved money for financial and crypto clients, including Tether, which used the bank to process purchases and redemptions of USDT.
Federal prosecutors say Capstone presented itself to banks as an IT company while actually running accounts for financial and cryptocurrency clients. Court filings in California list about $79.1 million seized from a Capstone account at Wells Fargo Securities, $1.86 million at Wells Fargo Bank and $2.06 million at JPMorgan Chase. The complaint also covers roughly 1.18 million USDT held at two wallet addresses, bringing the claimed total to about $84.2 million.
The bank wants its money back
EQIBank filed a request on June 29 in federal court to have the funds returned. The bank valued the seized assets at about $89 million and told the court they represent roughly 80 percent of its cash. On July 15, prosecutors filed a separate civil forfeiture complaint seeking the full $84.2 million.
The case ran for months with little public attention. That changed when Tether confirmed its connection to EQIBank.
What Tether has actually said
On September 25, Tether told PYMNTS its exposure to EQIBank was less than 0.034 percent of the total assets of the Tether group. It gave no dollar figure and did not say whether any of the frozen money backs USDT reserves.
Follow-up reporting put a ceiling on the number. Tether has since confirmed it held less than $63.8 million at EQIBank after the seizures, according to a summary of the company statements by Blockchair.
The denominator in that 0.034 percent figure matters. It refers to group assets, while the published reserve figures describe Tether International, a different issuer entity, on a different date. As of June 30, Tether International reported $187.75 billion in assets against $183.64 billion in liabilities, an excess of $4.11 billion. That attestation does not identify any EQIBank balance, so it cannot tell holders whether frozen funds were part of USDT backing.
Why holders should read the numbers carefully
None of this means USDT holders have lost $84 million. The assets in the forfeiture case are held in the name of Capstone, and the court filings do not identify the listed property as belonging to Tether. The decisive questions are the size and legal owner of the EQIBank balance, whether any of it belongs to USDT reserves, and whether Tether can still use it. Those questions remain unanswered.
The episode still matters for a simple reason: it shows how much of the stablecoin system depends on banking plumbing that can freeze without warning. Tether is the largest stablecoin issuer in the world, and even a nine-figure dispute at one correspondent bank is enough to raise questions about access to reserves.
The banking channel problem is not new
There is history here, too. In 2019, the New York Attorney General accused Tether and Bitfinex of concealing the loss of access to $850 million handed to the payment processor Crypto Capital, with Tether funds allegedly used to cover the shortfall. Both companies denied wrongdoing and the case was settled in 2021, with the companies paying $18.5 million and agreeing to quarterly transparency reports.
The Capstone case is smaller by an order of magnitude, but the shape of the problem is familiar: money moving through intermediaries whose behavior the issuer does not fully control, and which regulators can freeze with a court order. Tether said it was unaware of the actions of Capstone before the case surfaced.
It is also a reminder of why the issuer has spent recent years diversifying its custody and banking arrangements, adding multiple banking partners and moving reserves into US Treasury bills held directly. Tether reports holding tens of billions in short-dated Treasuries, and its quarterly attestations have become the main public window into its balance sheet.
The regulatory backdrop sharpens the stakes
The timing is awkward for the industry. The Federal Reserve proposed rules on September 24 to implement the GENIUS Act, requiring US-regulated stablecoin issuers to back every token one-for-one with cash, Fed balances or short-dated Treasuries, and to redeem within two business days. Those rules apply to permitted issuers under US supervision, a category Tether does not occupy for its main token.
Still, the direction of travel is clear: US policymakers want stablecoin reserves held in ways that a court order cannot quietly strand. The Capstone case shows the older model, where offshore issuers depend on payment processors and small international banks, is exactly the arrangement regulators are trying to phase out of the dollar system.
Where the case goes next
The motion by EQIBank to recover the funds is pending. The forfeiture complaint filed by prosecutors in the Eastern District of California remains active. Neither the Department of Justice nor Wells Fargo or JPMorgan has commented publicly on the accounts.
For Tether, the practical damage looks limited. Even at the high end of the estimates, the frozen amount is a rounding error next to a $183 billion liability base, and USDT has held its dollar peg through the news cycle. The reputational question is different. Holders now know that one banking channel of the issuer ran through a processor accused of misrepresenting itself to major US banks, and that the issuer learned about it from a court case rather than from its own partner.
Watch two things from here: whether the court filings eventually state an EQIBank balance in plain figures, and whether Tether updates its attestation disclosures to address the case directly. Until one of those happens, the gap between a 0.034 percent figure and a $63.8 million ceiling is where the story lives.