While the new tug was preparing for service in the South Atlantic Blockading Squadron, 17 Confederate agents disguised as passengers seized Chesapeake off Cape Cod, Massachusetts on 7 December 1863 as that packet was steaming from New York City to Portland, Maine.

On 17 December, the recently captured blockade runner Ella and Annie — which had been hastily manned, armed, and sent to sea — finally caught up with her at Sambro, Nova Scotia.

Shortly thereafter, the Northern gunboat Dacotah arrived on the scene; and her commanding officer prevented Ella and Annie from taking the recaptured tug back to Boston, lest such action seriously undermine relations between the United States and the British Empire.

The tug served in the South Atlantic Blockading Squadron for the remainder of the war, spending most of her time near Breach Inlet in the line of Union warships outside Charleston Bar.

Ironically, her greatest success came on the morning of 23 December, not when she was on her blockade station, but while she was steaming from Charleston bar to Georgetown, South Carolina, with provisions for screw sloop Canandaigua.

Upon boarding the prize, they learned that she was Julia, a fast, shallow-draft, iron-hulled vessel built in 1863 at Renfrew, Scotland — apparently for the express purpose of violating the Federal blockade.

The almost heroic efforts of the boarding party managed to get Julia afloat and underway on her own power shortly after daylight on the following morning, and she was ultimately sent to Key West where she was condemned by the prize court.