Tether has funds frozen at EQIBank after US seizure

Tether has some of its funds tied up with EQIBank, an offshore banking partner that has run into trouble after US authorities seized assets linked to the bank. Tether itself says the exposure is limited: the assets held at EQIBank represent less than 34% of the company’s total assets.

In short

• Tether has funds tied up with EQIBank, which faces liquidation risk after US seizure
• The exposure amounts to less than 34% of Tether’s total assets
• EQIBank is an offshore banking partner of Tether

EQIBank in trouble after US action

According to a report by The Information, EQIBank is under pressure after US authorities seized assets connected to the bank. As a result, the bank risks being liquidated, meaning that customer assets may not be readily available.

Tether confirms that it has funds outstanding with EQIBank, but wants to quickly allay concerns. The company says it concerns a limited position that poses no material risk to the backing of its stablecoin USDT.

Tether plays down the impact

The 34% figure is small relative to Tether’s total assets, which amount to tens of billions of dollars. Tether manages the world’s largest stablecoin and keeps it backed by, among other things, US government bonds and other liquid assets.

The issue shows that stablecoin issuers, too, are dependent on traditional banking partners, and can therefore be vulnerable to problems at those institutions. We previously reported how banks are increasingly playing a role in the broader crypto sector, such as Raiffeisen Bank, which gives 1.8 million customers access to crypto via Bitpanda. Whether the situation at EQIBank will have further consequences for Tether or its users is as yet unclear.