US prosecutors are seeking the forfeiture of about $84.2 million in bank balances and stablecoins tied to Capstone Ltd., a payment intermediary used by Dominica-licensed EQIBank to access US dollar rails.
The assets have been seized, but the civil case has not produced a final forfeiture judgment or a finding that Capstone, EQIBank, Tether or Bitfinex committed wrongdoing. EQIBank says it owns the money, was not a target of the investigation and could face liquidation if it cannot recover the funds. Tether has confirmed that it has assets at EQIBank while saying its exposure is less than 0.034% of group assets and that it had no knowledge of the conduct the US Department of Justice alleges against Capstone.
The dispute matters beyond the amount at issue. It exposes how a chain running from a stablecoin issuer’s customers, through an offshore bank and a third-party processor, into accounts at large US institutions can concentrate legal, liquidity and operational risk at an intermediary that end clients may not directly select or monitor.
What prosecutors seized
A forfeiture complaint filed July 15 in the US District Court for the Eastern District of California identifies approximately $79.11 million at Wells Fargo Securities, $1.86 million at Wells Fargo Bank, $2.06 million at JPMorgan Chase Bank and two USDT balances of about 1.12 million and 54,578 tokens. At USDT’s intended one-dollar value, the listed property totals roughly $84.2 million.
The complaint is an action against the property, not a criminal conviction. Public court summaries and current reports say prosecutors allege that Capstone presented itself to US banks as an information-technology business while moving money for financial and cryptocurrency clients. That characterization remains an allegation; the full complaint was not freely accessible for independent review, and the court has not adjudicated the ownership of the assets or the underlying conduct.
Capstone provided the US-facing payment layer for EQIBank. According to reports that cite court records and company responses, EQIBank directed transfers through Capstone, while Tether used EQIBank for wire activity connected to customers buying and redeeming USDT. This makes Tether’s connection indirect: the seized accounts were held in Capstone’s name, not Tether’s, and Tether was not identified as the target of the forfeiture action.
EQIBank says the seizure threatens its survival
EQIBank sought the return of approximately $89 million in a separate filing on June 29. The bank says the seized money represents roughly 80% of its monetary holdings and has warned that permanent loss could force it into liquidation.
US District Judge Dale A. Drozd denied the bank’s request on July 16 after the government filed the civil forfeiture case. Reports of the ruling say the denial was procedural: once the forfeiture action was pending, the court could not return the property through the bank’s separate Rule 41(g) motion. It was not a decision that the United States owns the funds.
The difference between EQIBank’s roughly $89 million claim and the approximately $84.2 million listed in the forfeiture action has not been publicly reconciled. Nor is it clear how much of the seized pool belongs economically to EQIBank, Tether or other customers. Claimants must now assert their interests through the forfeiture proceeding, where EQIBank says it will rely on an innocent-owner claim.
Tether’s exposure remains undisclosed
Tether has not disclosed the dollar value of its balance at EQIBank. Its statement that the exposure is below 0.034% of group assets sets a ceiling rather than an exact figure. Applied to the $187.75 billion in assets Tether reported at June 30, that percentage implies an upper bound of about $63.8 million.
That comparison should not be read as proof that Tether has $63.8 million trapped at the bank. The actual amount may be materially lower, and public records do not establish which seized assets, if any, correspond directly to Tether funds. Tether reported liabilities of $183.64 billion and excess reserves of $4.11 billion at the end of June, placing the possible exposure in balance-sheet context without resolving ownership or recoverability.
Payment-chain risk is the central control issue
For banks, stablecoin issuers and payment firms, the case is a reminder that diligence cannot end with the immediate banking counterparty. A regulated institution may itself depend on an intermediary for clearing, custody, correspondent access or settlement. If that intermediary’s account purpose, customer base or transaction activity is described inaccurately to an upstream bank, every participant downstream can face frozen funds even when prosecutors do not accuse it of misconduct.
Controls therefore need to map the full payment chain: who legally holds each account, which institution executes the transfer, how the underlying customer and transaction purpose are represented upstream, and what contractual rights apply when money is restrained. Concentration limits and tested contingency arrangements also matter when one processor or correspondent holds a large share of an institution’s liquidity.
The case additionally illustrates why legal status must be tracked precisely. A seizure restricts access to property; a civil forfeiture complaint asks a court to transfer ownership to the government; and a final judgment resolves that request. Treating those stages as interchangeable can overstate both the government’s case and the affected firms’ losses.
Until the court rules, the most consequential questions remain open: who owns each portion of the seized property, whether the government can prove it is forfeitable, whether EQIBank can establish innocent ownership, and how much of Tether’s undisclosed balance is actually caught in the restraint.