The U.S. Justice Department filed a civil forfeiture complaint on July 15 in the Eastern District of California, accusing Montana-based payments processor Capstone Ltd. of operating without the required money-transmitter license in multiple states. Prosecutors allege the firm moved funds for Tether, the stablecoin issuer, while presenting itself to banks as a standard IT services provider.
Funds at Issue
The complaint identifies $84.2 million flowing through several accounts associated with Capstone. The bulk—$79.11 million—was held in a Wells Fargo Securities account under Capstone’s name. Additional balances include $2.06 million at JPMorgan Chase, $1.86 million in a separate Wells Fargo account, and roughly $1.1 million split between two wallets containing USDT.
Role of EQIBank
Capstone’s payments were routed through EQIBank, a digital bank licensed in Dominica. Prosecutors claim the bank directed the movement of the money and warned that the seizure could represent about 80% of the bank’s total holdings, potentially forcing it into liquidation.
Tether’s Position
Tether confirmed that EQIBank processed its USDT purchase and redemption wires but asserted it had no awareness of the alleged wrongdoing by Capstone. In a statement, the company quantified its exposure to the disputed funds at less than 0.034% of its reported $187.75 billion in assets at the end of Q2.
Legal Mechanics
Civil forfeiture allows the government to take assets linked to alleged illegal activity without a criminal conviction. Once a formal claim is lodged, any party asserting ownership has 21 days to respond under Supplemental Rule G. Capstone and EQIBank have already filed an innocent-owner defense, seeking to recover the seized money.
Prior Enforcement History
This action follows earlier regulatory scrutiny of Tether and its sister exchange Bitfinex. In 2021, both entities settled with the New York Attorney General, paying an $18.5 million fine after admitting that USDT had not always been fully backed dollar-for-dollar.
Why it matters
The forfeiture case highlights ongoing regulatory pressure on stablecoin issuers and the infrastructure that supports their fiat on-ramps. A substantial seizure could strain EQIBank’s liquidity, affect Tether’s reputation for custodial safeguards, and signal to the broader crypto industry that unlicensed money-transmission activities will face aggressive enforcement.
Why it matters
The outcome may reshape how stablecoin providers engage with banking partners, influence future licensing requirements for payment processors, and affect confidence among investors and users who rely on the perceived stability of USDT.
