US Seeks Forfeiture of $84.2M From Bank Linked to Tether

Highlights

The U.S. Department of Justice filed a civil forfeiture complaint seeking to seize $84.2 million linked to Capstone Ltd., a Montana-based payments processor that prosecutors say moved funds for Tether without a money-transmitter license. About $79.11 million was held in a Wells Fargo Securities account, with smaller amounts at JPMorgan Chase and in two USDT wallets. EQIBank, the Dominica-licensed digital bank tied to Capstone, says it handled the transfers but denies knowledge of the alleged conduct and warns that losing the funds could imperil its viability.

Sentiment Analysis

• The tone of the reporting is largely neutral to cautious, emphasizing legal procedure and potential financial consequences while reporting statements from all parties involved. The piece balances factual description of the forfeiture complaint with contextual details about the amounts, accounts, and the institutions named. It highlights risks to EQIBank’s solvency and notes Tether’s statement distancing itself from alleged misconduct. Overall, the article presents a measured view: it reports the government’s allegations without presuming guilt and includes responses from defendants and impacted firms. The sentiment is therefore best categorized as mixed, combining concern over financial risk with neutral legal reporting.

Article Text

On July 15, the U.S. Department of Justice filed a civil forfeiture complaint seeking to seize $84.2 million that prosecutors say moved through accounts used to process payments for Tether. The complaint, lodged in the Eastern District of California, names Capstone Ltd., a payments processor incorporated in Montana, as the primary target. According to the filing, Capstone operated as an unlicensed money transmitter in multiple states and represented itself to banks as an ordinary IT services company rather than as a payments intermediary.

The largest single portion of the funds at issue—$79.11 million—was held in a Wells Fargo Securities account in Capstone’s name as of September 14. Additional sums included $2.06 million at JPMorgan Chase, $1.86 million in another Wells Fargo account, and just over $1.1 million spread across two wallets holding USDT, Tether’s dollar-pegged stablecoin. Civil forfeiture allows the government to seek control of assets alleged to be connected to unlawful activity without a criminal conviction against the owner of those assets.

Prosecutors tie Capstone to EQIBank, a digital bank licensed in Dominica, which they say directed aspects of how the processor moved funds. EQIBank has warned that losing the approximately $84.2 million—representing roughly 80% of the bank’s reported holdings referenced in court papers—could push the institution toward liquidation. Capstone’s principals, identified in the complaint as Kotaro Shimogori and Mary Jeanne Thompson, were named in the filing, and law enforcement executed a search warrant at a Sacramento residence. Their attorney has stated that the company denies wrongdoing and seeks a swift resolution.

Tether confirmed that EQIBank handled its USDT purchase and redemption transfers but said it had "no knowledge" of the conduct alleged by the Department of Justice. In a statement provided to news outlets, a Tether spokesperson characterized the exposure as negligible relative to the firm’s reported assets—placing the disputed funds at under 0.034% of group assets reported at the end of the quarter. Tether and related entities have faced prior regulatory scrutiny: in 2021 Tether and its sister exchange Bitfinex settled with the New York Attorney General over reserves and transparency, paying fines and agreeing to certain restrictions.

Under the civil forfeiture process, Capstone and EQIBank have already filed an innocent-owner defense contesting the seizure of the funds. Federal rules governing forfeiture proceedings require claimants to respond within specified timeframes once a formal claim is asserted. The case will proceed through the civil courts, where the government must establish that the assets are subject to forfeiture under applicable statutes; the standard and processes in civil forfeiture differ from a criminal prosecution.

This action underscores regulatory and legal risks that can arise when nonbank payment processors and cross-border digital banks participate in the movement of cryptocurrency-related funds. Financial institutions and payment providers face licensing and compliance obligations designed to ensure transparency and oversight; prosecutors in this case allege those obligations were not met. At the same time, affected parties have emphasized lack of knowledge or intent, and the legal process will determine whether the government’s forfeiture claim succeeds.

Observers note that the case may have broader implications: regulators and enforcement agencies continue to scrutinize the rails used for stablecoin transactions and the intermediaries that support them. If the government prevails, the forfeiture could materially affect EQIBank’s liquidity and raise questions about the operational resilience of smaller cross-border banks serving crypto-related clients. The dispute also reinforces the importance for payments firms to secure appropriate licenses and for correspondent banks to conduct due diligence on client activities.

As the matter advances through the courts, parties will submit claims and defenses under the supplemental rules that govern civil forfeiture. The outcome will depend on factual findings about the nature of Capstone’s activities, the role of EQIBank, and whether the funds can be legally linked to unlicensed money transmission or other violations. Until adjudication, the complaint remains an allegation and the named entities maintain their respective positions.

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