The US Department of Justice is seeking to keep $84.2 million that, according a civil forfeiture complaint, moved through accounts used to process payments for Tether. The target is Capstone Ltd., a Montana-based payments firm prosecutors say moved money for the stablecoin issuer without the required license. Most of the funds—$79.11 million—were held at Wells Fargo Securities, with smaller sums at JPMorgan Chase, in a second Wells Fargo account, and in two USDT wallets. Tether confirmed EQIBank, the Dominica-based bank behind Capstone, processed its wire transfers, but said it had "no knowledge" of the conduct under investigation.

The complaint, filed on July 15 in the Eastern District of California before Judge Dale A. Drozd, alleges that Capstone operated as an unlicensed money transmitter—a business category regulators require a license for specifically because it moves other people's money—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Of the $84.2 million at stake, $79.11 million was withdrawn from a Wells Fargo Securities account in Capstone's name on September 14. Another $2.06 million sat at JPMorgan Chase, $1.86 million was held in a separate Wells Fargo account, and just over $1.1 million was split across two wallets holding USDT, Tether's stablecoin—a crypto token built to always trade for one dollar. Keeping that peg workable depends on dollars flowing in and out of the banking system as holders buy and redeem tokens—precisely the flows prosecutors say ran through the accounts at issue in this case.

The complaint names Capstone's owners as Kotaro Shimogori and Mary Jeanne Thompson, while the FBI executed a search warrant at a Sacramento residence. Their attorney said the company "denies any wrongdoing" and hopes to "resolve this matter quickly," according to the Financial Times.

Civil forfeiture is a legal process that allows the government to seize funds tied to an alleged crime without a criminal conviction against the money's owner. Capstone and EQIBank have already filed an innocent-owner defense over the seized funds. Under Supplemental Rule G, which governs these forfeiture cases, any claimant has 21 days to answer the government's complaint once a formal claim is filed with the court. How that defense holds up will determine whether Capstone and EQIBank recover the funds or the government keeps them.

Behind Capstone sits EQIBank, a Dominica-licensed digital bank that prosecutors say directed how the payments processor moved money. EQIBank has already warned that losing those funds—roughly 80% of everything the bank holds—could push it into liquidation.

In a statement provided to Reuters, Tether confirmed EQIBank handled its USDT purchase and redemption transfers, but insisted it had "no knowledge of the conduct by Capstone alleged by the Department of Justice." A spokesperson put the company's total exposure at under 0.034% of group assets—a small fraction of the $187.75 billion in assets Tether reported at the close of the second quarter.

This is not the first time Tether and its sister company Bitfinex have landed in a prosecutor's crosshairs over how they move money. In 2021, both companies reached a settlement with the New York Attorney General after admitting that USDT was not always backed dollar-for-dollar as advertised, paying an $18.5 million fine and agreeing to stop trading in the state. The new complaint zeroes in on a different layer of the same operation—the payment rails that move USDT's dollars, rather than the reserves backing the token.