US Seeks to Forfeit $84.2 Million Linked to Tether Payment Processor

SACRAMENTO, Calif. — Federal prosecutors are seeking to permanently seize more than $84.2 million from bank accounts and digital wallets tied to Capstone Ltd., alleging the company moved money for cryptocurrency issuer Tether through a payment network disguised as an information technology consultancy. Prosecutors say Capstone operated without the required federal or state money transmitter licenses.

The largest freeze took place Sept. 14, when authorities seized $79.11 million from a commercial account in Capstone’s name at Wells Fargo Securities. They also restrained $2.06 million at JPMorgan Chase, $1.86 million in a secondary depository account at Wells Fargo, and $1.1 million in USDT, Tether’s dollar-pegged stablecoin, across two private digital currency wallets.

The freezes have put EQIBank, an offshore digital bank chartered in the Commonwealth of Dominica, under acute financial strain. EQIBank said in subsequent legal submissions that the impounded money amounts to approximately 80% of its total balance sheet and warned that permanent forfeiture could force it into mandatory liquidation. Regulatory filings indicate the bank directed Capstone’s payment routing for dollar-denominated transactions involving digital asset market participants.

The civil forfeiture complaint was filed in the U.S. District Court for the Eastern District of California. In filings before U.S. District Judge Dale A. Drozd, prosecutors accuse Montana-registered Capstone of acting as an illicit money transmitter in at least six states. They allege it evaded compliance checks at federally insured depository institutions, including Wells Fargo and JPMorgan Chase, by telling bank officers its wire transfers were standard corporate billings and enterprise software revenue. Prosecutors say Capstone held neither federal nor state licenses.

Tether confirmed that EQIBank was one of the external payment processors it used to settle customer purchases and redemptions. It said it had no direct corporate oversight of Capstone and no prior knowledge of the licensing deficiencies alleged by the Justice Department. A Tether spokesperson described the company’s direct capital exposure as negligible: less than 0.034% of the $187.75 billion in group reserve assets reported in its second-quarter attestation statement. Tether oversees a supply of USDT exceeding $118 billion.

Federal Bureau of Investigation agents executed a federal search warrant at a private residence in Sacramento as part of parallel investigative proceedings. Court documents name Kotaro Shimogori and Mary Jeanne Thompson as Capstone’s principals. Lawyers for the company and its owners said Capstone denies the allegations of statutory noncompliance and improper banking declarations and is actively cooperating to resolve the civil action out of court.

Under 18 U.S.C. § 1960, operating an unlicensed money transmitting business is a federal offense, and property involved can be subject to civil forfeiture. Entities transferring money for the public must register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and obtain a separate money transmitter license in each state where customer transactions take place.

Capstone and EQIBank have both asserted an “innocent owner” defense under the Civil Asset Forfeiture Reform Act (CAFRA) and Supplemental Rule G of the Federal Rules of Civil Procedure. Rule G governs *in rem* forfeiture actions: a party claiming an interest in arrested property must file a formal verified claim, then an answer or a Rule 12 motion within 21 days. To establish the defense, claimants must prove by a preponderance of the evidence that they did not know of the conduct underlying the forfeiture or, after learning of it, did not fail to take all reasonable steps to end the property’s unlawful use.

Stablecoin operators use traditional correspondent banking networks to receive fiat deposits, issue digital tokens on-chain and pay redemptions in sovereign currency. With major domestic banks remaining cautious about direct exposure to offshore cryptocurrency entities, issuers have frequently relied on third-party payment processors, specialized fintech firms and offshore financial institutions to route wires into the Federal Reserve’s automated clearing systems.

The civil complaint remains pending before the Sacramento district court, with further proceedings scheduled after the statutory period for claimant filings. Tether’s fiat payment arrangements have faced scrutiny before: in 2021, Tether and its related cryptocurrency exchange, Bitfinex, paid $18.5 million to settle a New York Attorney General enforcement action over disclosures about reserve holdings and unauthorized operations in the state.