Tether, a major stablecoin issuer, announced that a portion of its reserves, specifically less than 0.034% of its total assets, has been frozen at EQIBank. This action followed a U.S. government seizure of money linked to the offshore bank. The incident has raised concerns regarding the location and management of Tether's USDT reserves, particularly how much is held outside the U.S.
EQIBank, licensed in Dominica, is currently facing significant financial distress and a potential liquidation risk. The bank is actively trying to recover about $89 million (78.3 million euros) that was frozen in accounts at Wells Fargo and JPMorgan Chase. These funds were linked to payment processor Capstone Ltd., and the seizure reportedly impacted around 80% of EQIBank's total cash holdings, leading to the warning of liquidation.
In related news, the U.S. Department of Justice (DOJ) filed a civil forfeiture complaint seeking approximately $61 million in Tether's USDT stablecoin. These funds are alleged to be proceeds from black-market sales of sanctioned Iranian crude oil laundered through Hong Kong-incorporated firms, Blessed Trust Limited and Hexa Whale Trading Limited. These firms reportedly used accounts at a UAE-based cryptocurrency exchange and misrepresented their business to financial institutions. The complaint alleges these entities moved over $1.5 billion to Iran's government and the Islamic Revolutionary Guard Corps (IRGC).
Separately, in an earlier action, the U.S. government froze $344 million in cryptocurrency, which Tether confirmed it supported by freezing two addresses. Chainalysis noted that the transaction patterns of these addresses were consistent with how other known IRGC wallets moved funds. This reflects a broader trend of increased coordinated enforcement by the DOJ and Treasury, combining civil forfeiture with expanding sanctions authority over digital assets, thus increasing exposure for non-U.S. exchanges and trading firms.
The recent $61 million forfeiture action by the U.S. Attorney's Office for the Southern District of New York involves ten TRON-network wallets holding USDT. Tether had already frozen seven of these wallets on June 15, 2025, and the remaining three on July 26, 2025. The seizure warrant issued on September 14, 2026, directs Tether to burn the frozen tokens and issue new tokens of equal value into FBI custody. The complaint also highlights the involvement of U.S.-based correspondent accounts in the alleged money laundering scheme, with Company-1 transferring significant sums to Hexa Whale and Blessed Trust through these accounts.
