The US Department of Justice filed a civil forfeiture complaint on July 15 targeting $84.2 million in accounts tied to Capstone Ltd., a Montana-based payments firm that prosecutors allege operated as an unlicensed money transmitter while processing payments for Tether.
According to the complaint filed in the Eastern District of California, Capstone operated without required licensing in at least six states and misrepresented itself to banks as an ordinary IT services company. The firm's owners, identified as Kotaro Shimogori and Mary Jeanne Thompson, were named in the complaint. An FBI search warrant was executed at a Sacramento residence, and the company's attorney stated it denies any wrongdoing and hopes to resolve the matter quickly.
Distribution of Seized Funds
Of the $84.2 million targeted for forfeiture, $79.11 million was held in a Wells Fargo Securities account in Capstone's name as of September 14. An additional $2.06 million was held at JPMorgan Chase, $1.86 million in a separate Wells Fargo account, and just over $1.1 million was split across two USDT wallets.
Civil forfeiture is a legal process that allows the government to seize funds tied to alleged criminal activity without requiring a criminal conviction of the money's owner.
Connection to EQIBank and Tether
Behind Capstone sits EQIBank, a Dominica-licensed digital bank that prosecutors say directed how the processor moved money. EQIBank has warned that losing these funds—approximately 80% of the bank's total holdings—could result in liquidation.
Tether confirmed that EQIBank handled its USDT purchase and redemption transfers, but stated it had no knowledge of the conduct by Capstone alleged by the Department of Justice. Tether estimated its total exposure at less than 0.034% of group assets, compared to $187.75 billion in total assets reported at the close of the second quarter.
Legal Precedent
This action is not the first regulatory enforcement against Tether and its sister company Bitfinex involving payment processing. In 2021, both companies settled with the New York Attorney General after admitting USDT was not always backed dollar-for-dollar as advertised, paying an $18.5 million fine and agreeing to stop trading in the state.
Capstone and EQIBank have filed an innocent-owner defense regarding the seized funds. Under the rules governing civil forfeiture cases, claimants have 21 days to answer the government's complaint once a formal claim is filed with the court.
