Court filings made public this week confirm that a retired judge sided with Circle after finding that Heka Funds deliberately concealed a financial relationship with Tether during their arbitration. The documents, part of Circle's push to have the February 2026 award formally confirmed, pull back the curtain on proceedings that had until now stayed largely private.

The dispute traces back to early March 2023, when Silicon Valley Bank collapsed and USDC briefly slipped below its dollar peg. During that window, Heka redeemed unusually large volumes of the stablecoin. Circle grew suspicious that the proceeds were flowing to Tether, effectively propping up USDT at a moment when confidence in USDC was shaken. The company suspended Heka's redemption access.

What the filings revealed about Tether's role

Evidence presented to arbitrator Robert Dondero, a retired judge, showed that Tether had invested roughly $800 million in Heka, accounting for about 75% of the fund's total assets. On top of that, Tether waived certain USDT minting fees for the fund. Circle argued those arrangements were material facts that Heka should have disclosed when it first set up its redemption relationship with the stablecoin issuer.

Dondero agreed. His ruling found that Heka intentionally stayed silent, even though the fund understood that revealing its Tether connection would have triggered what the arbitrator called "bells and whistles of concern" inside Circle. He dismissed Heka's $49 million lost-profits claim entirely and ordered the fund to cover approximately $166,000 in Circle's legal and expert fees.

Heka pushed back. The firm denied any market manipulation and said it has never faced a regulatory investigation. It also argued that Circle's decision to seek public confirmation of the arbitration award is a distraction from questions about how USDC itself was managed during the SVB crisis. The arbitration record, as it stands, tells a different story.

This article is for informational purposes only and does not constitute financial or investment advice.