Tether Caught in $84M DOJ Seizure Through Its Banking Chain

• US prosecutors are pursuing forfeiture of funds held by Sacramento-based payments firm Capstone Ltd.
• Tether and Bitfinex are linked to the case through their banking relationship with Dominica-based EQIBank.
• Authorities have not accused Tether, Bitfinex or EQIBank of wrongdoing.
• The seizure threatens EQIBank’s survival while barely registering on Tether’s balance sheet.

US federal prosecutors are seeking forfeiture of roughly $84.2 million tied to Capstone Ltd., a Montana-registered payments company operated from Sacramento, and reporting this week named Tether and its affiliated exchange Bitfinex as the two unnamed crypto companies whose dollars moved through it. A September 14 order from the US District Court for the Eastern District of California lists about $83 million at Wells Fargo and JPMorgan Chase plus roughly 1.18 million USDT. Tether’s link runs through EQIBank, a Dominica-licensed digital bank that used Capstone to reach the US banking system. Neither Tether nor Bitfinex stands accused, yet the case exposes the intermediaries that still sit between the largest stablecoin and ordinary dollar accounts.

The complaint itself was filed on July 15. The names behind it surfaced only this week.

$700 million through one Wells Fargo account

Capstone registered with FinCEN as a money services business, but prosecutors say it presented itself to Citi, Wells Fargo and JPMorgan Chase as an IT services company. According to the complaint as reported by The Information, it answered “no” when banks asked whether it handled third-party money and whether virtual currency was a high-risk part of its business. Those answers decide how deeply a bank looks at a client.

More than $700 million passed through a single Wells Fargo business account between March and December 2025. Stripping out Treasury-related transactions leaves about $337 million paid out, nearly two-thirds of it to hundreds of recipients, mostly outside the US, on behalf of the two crypto companies. Prosecutors also allege Capstone acted as an unlicensed money transmitter in at least six states. Montana is the only US state without a money transmitter license, but moving money for customers elsewhere can still require licenses in those states.

Citi saw it first

Citi closed Capstone’s accounts around May 2025 over potential anti-money-laundering concerns, and activity shifted to Wells Fargo, which later discovered Capstone was registered with FinCEN as a money services business. JPMorgan spotted transactions tied to suspected impersonation-scam victims. In one case Capstone described a payment as software licensing, while an executive later told Miami Beach police it was a USDT purchase.

That points to the second strand of the case. Prosecutors allege some Capstone accounts received cash from victims contacted by people posing as FBI agents, converted it into crypto, sometimes USDT within a day, and forwarded it for a fee. That part of the case reportedly centers on a single account holding just over $2 million. The DOJ does not allege Tether, Bitfinex or EQIBank knew. Capstone’s lawyer, Brian Klein, said the company denies wrongdoing and will seek dismissal.

Where Tether fits in

Tether never banked with Capstone. It confirmed it was an EQIBank customer, and EQIBank routed dollar activity through Capstone because Capstone held accounts at major US banks. People familiar with the transactions told the Financial Times that Tether and Bitfinex are the complaint’s two crypto companies, and Reuters later reported the same link.

Tether said it had “no knowledge of the fraudulent conduct by Capstone” alleged by the DOJ, and put its EQIBank holdings at under 0.034% of group assets. Against $187.75 billion in assets at the end of June, that caps exposure near $63.8 million.

Why EQIBank’s dollars got frozen

Civil forfeiture is a case against the money itself, so prosecutors do not need to charge anyone. Prosecutors only need to connect funds to an alleged violation, and anyone claiming the money must then prove their stake in court. EQIBank’s dollars sat in accounts titled to Capstone, pooled with everything else it processed, so freezing Capstone froze them too.

Every extra link in a payment chain adds a party whose compliance failures can travel upstream. The Information ties Tether’s use of such arrangements to its long-running difficulty securing direct relationships with major US banks. USDT settles on-chain in seconds. Minting and redeeming it still runs through banks and processors.

EQIBank fights for survival

The bank says the seizure captured about 80% of its financial assets, which it puts at roughly $89 million, above the $84.2 million in the order. It warns it may not continue operating without a release. EQIBank says it learned on April 2 that the money was frozen. Its June 29 motion to recover the funds failed on July 16, after prosecutors filed the forfeiture complaint. The bank now argues it is an innocent owner and says US authorities told it neither it nor its depositors are targets. Dominica’s regulator has placed it under enhanced supervision, with liquidation a possible outcome.

A rounding error for Tether

Tether’s second-quarter attestation shows $4.11 billion in excess assets and about $1.5 billion in quarterly operating profit. USDT supply stood near $184.6 billion.

One quarter of profit would cover the worst case more than 20 times. The case reaches Tether’s banking plumbing and leaves its reserves untouched.

Pressure on offshore banking rails

US banks serving payment processors will likely scrutinize nested setups, where one licensed firm quietly moves money for another institution’s clients. Capstone gives compliance teams a documented case of an onboarding questionnaire hiding a crypto client base worth hundreds of millions.

Tether has been building alternatives. It joined a $39 million Series A for Georgia-licensed Pave Bank in October 2025 and has since expanded the partnership. In January it launched USA₮, issued by federally chartered Anchorage Digital Bank with Cantor Fitzgerald as reserve custodian. Global USDT still leans on offshore intermediaries, while regulated players move fast: SoFi began settling card payments in its SoFiUSD stablecoin over Mastercard this week.

The case also sits awkwardly beside Tether’s enforcement record. This year it helped US authorities freeze $344 million in USDT and recover nearly $61 million from a pig-butchering fraud, even as a lawsuit reported on September 2 challenges a $42.4 million freeze made before a formal warrant.

The September 14 order opened a public notice period, giving anyone with a claim to the money up to 60 days from first publication to come forward and then 21 days to answer the complaint. Capstone’s planned motion to dismiss and EQIBank’s innocent owner claim will play out on that schedule, and with its first attempt already rejected, EQIBank is running out of time to recover funds before Dominica decides its future. Tether’s attestation for the quarter ending September 30 will show whether the company writes down its EQIBank balance.