Stablecoin issuer Tether said it had “limited” exposure to a bank that allegedly directed a payments company to move hundreds of millions of dollars on its behalf, after United States prosecutors filed a civil forfeiture complaint targeting roughly $84 million in funds connected to the firm.

The complaint, filed by the United States Department of Justice, names Capstone, a payments business based in Montana. Prosecutors alleged that Capstone illegally transferred hundreds of millions of dollars at the direction of EQIBank, a bank where Tether holds some of its assets, and reportedly froze about $84 million in the firm’s accounts as part of the action. Media reports subsequently linked both Tether and Bitfinex to the payments business. Tether and Bitfinex are closely affiliated, with both companies operating under parent firm iFinex.

Civil forfeiture is a legal process that allows the government to seize assets it alleges are connected to suspected illegal activity, without the need for a related criminal conviction. Because the action is civil rather than criminal, any further developments in the matter would surface through the court process, where the government’s claims against the named funds can be contested.

In response to the reports, a Tether spokesperson told Cointelegraph that the company had “no knowledge” of any of the alleged conduct. Tether confirmed that it is a customer of EQIBank — the bank the Justice Department alleged directed Capstone to send and receive money — but said the amount it held there represented just 0.034% of the group’s total assets, a figure indicating that the issuer spreads its reserves across more than one institution.

Justice Department officials alleged that Capstone was unlicensed and had made payments to “hundreds of individuals and entities” on behalf of Tether and Bitfinex, according to the Financial Times. A Tether spokesperson did not respond to a question about how the seizure could affect the company’s customers.

As of Friday, USDT — the stablecoin issued by Tether and the largest of its kind by market value — had a market capitalization of about $184 billion. Stablecoins such as USDT are designed to hold a fixed value against the US dollar through reserve assets held by the issuer, a setup that draws attention to the institutions safeguarding those reserves whenever legal actions touch them.

Source: Cointelegraph