$84.2M in Tether-Linked Funds Seized as DOJ Targets "Unlicensed" Processor 🏦

U.S. prosecutors filed a civil forfeiture complaint on July 15 seeking to keep $84.2 million that moved through accounts allegedly used to process payments for Tether's USDT stablecoin. The complaint, filed in the Eastern District of California before Judge Dale A. Drozd, names Montana-based payments firm Capstone Ltd. and its owners, Kotaro Shimogori and Mary Jeanne Thompson, who the FBI searched at a Sacramento residence. Capstone's attorney said the company "denies any wrongdoing" and hopes to "resolve this matter quickly," according to the Financial Times.

Prosecutors allege Capstone operated as an unlicensed money transmitter in at least six states while presenting itself to banks as an ordinary IT services company. Of the $84.2 million at stake, $79.11 million was pulled from a Wells Fargo Securities account in Capstone's name on September 14, with another $2.06 million at JPMorgan Chase, $1.86 million in a separate Wells Fargo account, and just over $1.1 million split across two USDT wallets. Civil forfeiture is a legal process that lets the government seize funds tied to an alleged crime without a criminal conviction against the money's owner.

Behind Capstone sits EQIBank, a Dominica-licensed digital bank that prosecutors say directed how the processor moved money. EQIBank has warned that losing those funds — roughly 80% of everything the bank holds — could push it into liquidation. Tether confirmed EQIBank handled its USDT purchase and redemption transfers but said it had "no knowledge of the conduct by Capstone alleged by the Department of Justice," in a statement to Reuters, putting total exposure at under 0.034% of group assets against the $187.75 billion Tether reported at the close of the second quarter.

Tether and its sister company Bitfinex previously settled with the New York Attorney General in 2021 after admitting USDT wasn't always backed dollar-for-dollar, paying an $18.5 million fine and agreeing to stop trading in the state. Capstone and EQIBank have filed an innocent-owner defense over the seized funds, and under Supplemental Rule G, which governs these forfeiture cases, claimants have 21 days to answer the government's complaint once a formal claim is filed with the court.