Capstone Ltd. described itself to its banks as an ordinary IT services company. On September 14, the United States government removed $79.11 million from a Wells Fargo Securities account held in its name. The money, in the government’s telling, was not IT revenue. It was proceeds of moving other people’s money, across at least six states, without the money-transmitter license that regulators demand precisely from businesses whose trade is other people’s money.
The removal came two months after the Department of Justice filed a civil forfeiture complaint on July 15 in the Eastern District of California, before Judge Dale A. Drozd. Civil forfeiture is a mechanism with a useful bluntness: it lets the government seize funds it connects to an alleged crime without first winning a criminal conviction against the money’s owner. In all, the complaint reaches for $84.2 million. There is the $79.11 million from the Wells Fargo Securities account. There is $2.06 million at JPMorgan Chase, and $1.86 million in a separate Wells Fargo account. And there is just over $1.1 million, split across two wallets holding USDT, the stablecoin issued by Tether and built to trade, always, at one dollar.
Capstone, based in Montana, is identified in the complaint with its owners, Kotaro Shimogori and Mary Jeanne Thompson, and the FBI has executed a search warrant at a Sacramento residence. The company’s attorney said it “denies any wrongdoing” and hopes to “resolve this matter quickly,” according to the Financial Times.
Behind the processor sits a bank. EQIBank, a digital bank licensed in Dominica, is the institution prosecutors say directed how Capstone moved the money, and it is EQIBank rather than Tether that stands to be crippled first: the bank has warned that the frozen funds amount to roughly 80 percent of everything it holds, and that losing them could push it into liquidation.
Tether, for its part, confirmed that EQIBank handled the wire transfers for purchases and redemptions of USDT, and said it had “no knowledge of the conduct by Capstone alleged by the Department of Justice,” in a statement provided to Reuters. A spokesperson put the company’s total exposure at under 0.034 percent of group assets. At the close of the second quarter, Tether reported $187.75 billion in assets, a denominator against which three hundredths of one percent is arithmetic that flatters.
It is not the first time Tether, or its sister company Bitfinex, has appeared in a prosecutor’s file over how its money travels. In 2021, both companies settled with the New York Attorney General after admitting that USDT had not always been backed dollar-for-dollar, as advertised. The settlement cost $18.5 million and a departure from the state: the companies agreed to stop trading there.
Capstone and EQIBank have already filed an innocent-owner defense over the seized funds. Under Supplemental Rule G, which governs forfeiture cases of this kind, a claimant has 21 days to answer the government’s complaint once a formal claim is filed with the court.
So the timeline is short, the defendant is a sum of money, and the money is in the government’s custody. Whether $79.11 million ever returns to an IT company in Montana is now a question on a judge’s calendar in the Eastern District of California.