Circle Internet Group (CRCL) barred Heka Funds, a crypto investment vehicle backed by rival stablecoin issuer Tether, from redeeming its USDC stablecoin after suspecting the fund of market manipulation, the Financial Times reported late Tuesday, citing arbitration documents made public on the same day.

The documents, filed in federal court in Boston, show Heka sought $49 million in damages after Circle suspended its account in late 2023, but an arbitrator rejected the claim and awarded Circle about $166,000 in legal fees, according to the report.

Circle reportedly argued Heka redeemed unusually large amounts of USDC during the 2023 Silicon Valley Bank crisis and suspected the proceeds were being funneled to Tether.

Circle, Heka and Tether did not immediately respond to MT Newswires' request for comment.

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