Tether EQIBank Exposure Reveals Crypto Banking Counterparty Risks

On October 5, 2026, Tether confirmed that its exposure to EQIBank, its partner bank, was less than 0.034% of its total assets following a US asset seizure. The US Department of Justice had filed a civil forfeiture complaint in July 2026 targeting $84.2 million in assets tied to payments processor Capstone. EQIBank, which acted as Capstone’s banking partner, had accounts frozen, preventing any party from accessing the funds while litigation unfolds.

The incident highlights a critical blind spot in crypto banking: counterparty risk at the banking partner level. When a partner bank’s accounts are frozen, users with funds in transit or pooled accounts are directly impacted. This poses significant challenges for DAOs and Web3 startups that rely on crypto banking platforms for treasury management and payroll, as frozen fiat funds can halt operations regardless of stablecoin solvency.

EQIBank claims innocent-owner status and is fighting to recover the seized funds. The forfeiture case is pending, and the outcome will set a precedent for crypto banking partners. A ruling in EQIBank’s favor could establish that conduit banks can recover seized funds, while a ruling against it would signal substantial legal risk for crypto banking partners.

In response to this event, businesses using crypto banking services are advised to audit their fiat settlement chains, ensure custody segregation, and review freeze terms. Transparency in banking partners, independent custody, and clear compliance postures are recommended to mitigate risks.