U.S. prosecutors seize Capstone accounts tied to Tether banking flows

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U.S. prosecutors seize Capstone Tether accounts

Highlights

U.S. prosecutors froze about $84 million in Capstone accounts at Wells Fargo and JPMorgan Chase, alleging that the company operated an unlicensed money-transmitting business used by crypto-linked clients.
More than $700 million passed through Capstone’s Wells Fargo business account between March and December 2025, with nearly two-thirds of $337 million in non-Treasury payouts appearing to have been made on behalf of Tether and Bitfinex.
EQIBank says the seizure has caused a material liquidity crisis, while Tether says its exposure to the bank represents less than 0.034% of the group’s total assets.

Forfeiture case centers on Capstone and EQIBank links

As reported by Financial Times, citing the Department of Justice civil forfeiture complaint filed in California, prosecutors allege Capstone operated as an unlicensed money-transmitting business, concealed the nature of its activity from U.S. banks and moved hundreds of millions of dollars for clients linked to crypto groups.

People familiar with the matter identified those unnamed firms as Tether and its sister exchange Bitfinex. Prosecutors in the Eastern District of California have frozen roughly $84 million in Capstone accounts at Wells Fargo and JPMorgan Chase, and the FBI executed a search warrant at the Sacramento home of Kotaro Shimogori and Mary Jeanne Thompson, listed as Capstone owners or controlling persons.

The complaint says Capstone agreed to work for Dominica-based EQIBank in August 2024, then incorporated in Montana three weeks later and registered with FinCEN as a money services business. Prosecutors allege the business was run from Sacramento and gained access to the U.S. financial system by presenting itself as an IT services company when opening accounts at Citi, JPMorgan Chase and Wells Fargo.

According to the complaint, Citi moved in May 2025 to close Capstone's account over anti-money laundering concerns, prompting the company to shift $65 million to Wells Fargo. More than $700 million passed through a Wells business account between March and December 2025, including large Treasury transactions, and prosecutors said that excluding Treasury purchases, $337 million was paid out, with almost two-thirds appearing to go to hundreds of individuals and entities on behalf of Tether and Bitfinex, mainly outside the U.S.

Tether and Bitfinex said they are customers of EQIBank but had no knowledge of the fraudulent conduct alleged against Capstone by the DoJ. Tether added that its exposure to EQIBank amounts to less than 0.034% of the group’s total assets. A lawyer for Capstone said the company denies wrongdoing, plans to seek dismissal of the forfeiture complaint and has co-operated with the investigation, while EQIBank has argued in court that it was misled into believing Capstone was properly registered.

Banking access strain ripples across crypto payments

The dispute underscores how Tether, issuer of the USDT stablecoin, still struggles to obtain basic banking access from major institutions even as it remains central to crypto market liquidity. The article says Tether holds more than $140 billion of U.S. government debt, while its advisory group Marlin Capital bought $10 million of EQIBank convertible instruments in 2024 and discussed further backing tied to potential bank account access for Tether at DBS in Singapore.

DBS said it does not comment on specific names and has never had an appetite for association with illicit funds or inappropriate dealings. People familiar with the situation said DBS has so far not offered Tether a bank account.

The complaint also alleges Capstone helped fraudsters posing as FBI agents convert stolen funds into stablecoins in an impersonation scheme targeting elderly victims. Prosecutors say deposits into a Capstone Chase account were typically followed within a day by transfers of matching USDT amounts, minus fees, to a foreign counterparty, and they argue that those transfers amount to unlicensed money transmission in at least six states where that conduct is a felony.

EQIBank has said the seized funds largely belong to its customers and that the action leaves it facing a material liquidity crisis. The bank argues that lenders in small jurisdictions often rely on intermediaries such as Capstone to reach the dollar payments system because anti-money laundering rules have pushed U.S. banks to cut off categories of customers seen as higher risk, including crypto firms and institutions in island financial centres.

In our earlier coverage of the rapid surge in the U.S. 10-year Treasury yield, we highlighted how sharp moves in benchmark rates have often coincided with periods of financial disruption and pressure on risk assets. We also noted that higher borrowing costs can expose hidden leverage and funding vulnerabilities, with regional banks, private credit, utilities, and housing-related sectors among the areas most sensitive to a sudden rise in yields.

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