US seizes Capstone’s bank accounts over alleged illegal transfers for Tether and Bitfinex

Federal prosecutors have moved to seize roughly $84.2 million in assets from Capstone Ltd., alleging the firm served as a conduit for illegal banking transfers benefiting Tether and Bitfinex. The civil forfeiture complaint, filed on July 15, targets accounts held at Wells Fargo and JPMorgan, with the bulk of the seized funds, approximately $79.11 million, sitting in a Wells Fargo Securities account.

The government’s case centers on a relatively obscure Caribbean institution called EQIBank, which prosecutors say directed Capstone to move hundreds of millions of dollars on behalf of the two crypto companies.

What prosecutors are alleging

According to the complaint, Capstone functioned as an intermediary that allowed Tether and Bitfinex to access US banking rails they might not have been able to use directly. EQIBank allegedly orchestrated the arrangement, with Capstone executing transfers through its accounts at two of America’s largest banks.

A federal district judge in California has already denied EQIBank’s motion to return the seized property after prosecutors filed their formal complaint.

EQIBank claims the frozen assets represent approximately 80% of its total monetary holdings, putting the institution’s entire portfolio at around $89 million.

Tether’s response and exposure

Tether confirmed that its exposure to EQIBank amounts to less than 0.034% of its total assets.

Tether and its sister company Bitfinex have spent years fending off allegations about their banking relationships. The New York Attorney General’s office settled with both companies in 2021 over claims that Bitfinex had covered up an $850 million loss using Tether’s reserves. That settlement included an $18.5 million fine and a ban on serving New York customers, though neither company admitted wrongdoing.

What this means for stablecoin confidence

The potential liquidation of EQIBank adds another dimension. If an institution that served as a banking partner for major crypto companies collapses because of US enforcement action, other small banks and payment processors in the space will take notice.

For investors and traders, Tether’s peg to the dollar has weathered far more serious crises than an $84.2 million forfeiture case that the company says barely touches its balance sheet.

Disclosure: This article was edited by John Chen. For more information on how we create and review content, see our Editorial Policy.