US prosecutors have seized roughly $84.2 million from accounts and wallets linked to payments firm Capstone Ltd, putting pressure on EQIBank, the Dominica-licensed digital bank that processed Tether wire transfers, though Tether says its own exposure is minimal. The stablecoin issuer confirmed the banking relationship this week but stressed that assets it holds at EQIBank amount to less than 0.034% of group assets, and said it had no knowledge of the conduct the Department of Justice alleges against Capstone.
The seizure stems from a civil forfeiture complaint the DOJ filed on July 15 in the US District Court for the Eastern District of California. Prosecutors allege Capstone operated as an unlicensed money transmitter in at least six states while presenting itself to banks as an ordinary technology services company. Court documents describe EQIBank, which had no direct Federal Reserve account, as standing behind Capstone and directing how the processor moved money. Prosecutors also allege that a cyber-fraud group used Capstone accounts to move stolen funds, with some of it converted into USDT.
What was seized
A September 14 federal court order itemises the property. It lists about $79.11 million from a Wells Fargo Securities account held in Capstone name, $1.86 million from a second Wells Fargo account, and roughly $2.06 million at JPMorgan Chase. The order also names about 1.12 million USDT from one address and 54,578.45 USDT from another. Combined at the dollar peg, the listed property comes to roughly $84.2 million. EQIBank describes its loss differently, citing around $89 million, a gap that has not been reconciled publicly.
Capstone owners were identified in the filings as Kotaro Shimogori and Mary Jeanne Thompson, and the FBI searched a California residence. Their attorney said the company denies any wrongdoing and intends to challenge the complaint. None of the allegations has been tested at trial.
| Item | Amount |
|---|---|
| Wells Fargo Securities account (Capstone) | $79.11 million |
| Second Wells Fargo account | $1.86 million |
| JPMorgan Chase account | $2.06 million |
| USDT, first address | 1.12 million tokens |
| USDT, second address | 54,578.45 tokens |
The bank in the middle
EQIBank used Capstone to reach the US banking system, and the freeze has hit it hard. The bank says the seizure covers around 80% of its monetary holdings and could push it into liquidation. It filed a motion to recover the funds, arguing it was an innocent owner that Capstone had misled about its registration and operations. Judge Dale A. Drozd denied the motion on July 16 on procedural grounds, a ruling that followed the forfeiture filing by one day and turned on the court equitable jurisdiction. EQIBank warned publicly on September 9 that continued loss of the funds could force it to wind down.
Tether had no knowledge of the conduct that the Department of Justice alleges against Capstone, a company spokesperson said, confirming the banking relationship without disclosing a dollar figure.
Why the Tether connection matters
Tether is not a target of the case. No charge names the company, and the forfeiture complaint aims at Capstone accounts rather than at Tether reserves. The connection runs through EQIBank, which processed wire transfers tied to USDT purchases and redemptions for clients. When prosecutors froze the accounts, the question became how much Tether money sat behind the same door.
The 0.034% figure answers that narrowly. Against the $187.75 billion in group assets Tether reported for the quarter ending June 30, it implies an upper bound of roughly $64 million held at EQIBank. Tether has not published a breakdown of its deposits across offshore banks, so the statement answers the EQIBank question without addressing the wider one. Its excess reserve buffer stood at $4.11 billion at the end of June, down from $8.23 billion three months earlier, a decline the company attributes to redemptions and interest paid out.
A wider plumbing problem
Analysts note the case does not suggest any immediate threat to USDT reserves or its dollar peg. The stablecoin market stood near $307.3 billion as of September 25, with USDT at about $183.7 billion and USDC at $76.4 billion. The episode instead highlights counterparty risk in the banking chain that stablecoin issuers rely on to process deposits and redemptions. That chain often runs through small offshore banks with thin capital buffers, banks that in turn depend on correspondent relationships and payment processors to touch the US system.
The timing is awkward for the industry. The Federal Reserve voted this week to propose its first reserve and capital rules for the stablecoin issuers it supervises under the GENIUS Act, including a requirement that issuers notify the Fed within 24 hours if reserves fall below outstanding tokens. The Fed framework covers US-supervised issuers, not offshore ones like Tether, but the Capstone case gives US lawmakers a concrete example of what happens when the banking leg of a stablecoin fails.
Under the rules governing forfeiture cases, a claimant has 21 days to answer the government complaint once a formal claim is filed. Capstone and EQIBank have signalled an innocent-owner defence, which means the litigation over the $84.2 million is likely to run for months. EQIBank has asked the court to reconsider, and prosecutors have signalled they will contest any release of the funds. If the bank does move toward liquidation, affected depositors would join a queue behind the government claim, and any Tether funds still at the bank would be part of that process.
For now, the practical effect is limited. USDT trades near its peg, Tether keeps issuing, and the company has framed the episode as a third-party banking problem. The case still adds to the list of 2026 enforcement actions touching the plumbing behind dollar stablecoins, and it shows how quickly an offshore bank relationship can become a headline for the largest stablecoin issuer.