Federal prosecutors in California have seized the bank accounts of Capstone, a Montana-based payments company linked to Tether and its sister cryptocurrency exchange, Bitfinex. The Department of Justice (DoJ) alleges that Capstone, which was unlicensed, concealed the true nature of its operations from U.S. banks and conducted hundreds of millions of dollars in potentially illegal transfers on behalf of these crypto firms.

According to a civil forfeiture complaint filed in July, Capstone facilitated payments to “hundreds of individuals and entities,” primarily outside the United States, for Tether and Bitfinex. Additionally, the DoJ claims Capstone assisted fraudsters impersonating FBI agents in converting stolen cash into stablecoins, targeting elderly victims in an impersonation fraud scheme.

Prosecutors in the Eastern District of California have frozen approximately $84 million from Capstone’s accounts at Wells Fargo and JPMorgan Chase. A related FBI search was executed at the Sacramento residence of Kotaro Shimogori and Mary Jeanne Thompson, identified as Capstone’s owners or controlling persons.

Capstone’s involvement emerged through its contractual relationship with EQIBank, a small Caribbean institution based in Dominica specializing in online payments. EQIBank reportedly directed Capstone to process funds for the crypto entities, according to the DoJ. Tether’s investment adviser has invested in EQIBank, and last year the firm expressed willingness to provide additional support if EQIBank could help Tether secure a bank account in Singapore with DBS Bank.

Tether and Bitfinex have stated they are clients of EQIBank but denied any knowledge of the alleged fraudulent activities attributed to Capstone. They also emphasized that their assets at EQIBank are limited. There is no indication that Tether, Bitfinex, or EQIBank were aware of or complicit in the impersonation frauds cited by prosecutors.

Capstone’s lawyer denied the allegations and indicated plans to challenge the government’s civil asset forfeiture complaint through a motion to dismiss. The lawyer also said Capstone has cooperated with the investigation and hopes for a swift resolution.

EQIBank has contested the government’s assertion that it is not an “innocent owner” of the seized funds, arguing it was misled by Capstone, which it believed to be properly registered. EQIBank further stated that the seizures have caused a significant liquidity crisis, as it primarily holds funds on behalf of its customers. The bank explained it engaged intermediaries like Capstone to access the U.S. dollar financial system due to difficulties faced by institutions in smaller jurisdictions in maintaining banking relationships.

Prosecutors allege Capstone was incorporated in Montana shortly after agreeing to work for EQIBank in August 2024. Montana is the only U.S. state that does not require a license for money transmission. They claim Capstone operated under false pretenses, presenting itself as an IT services company when opening bank accounts with Citi, JPMorgan Chase, and Wells Fargo. This misclassification allegedly allowed Capstone to evade stricter scrutiny typically applied to payments firms.

In May 2025, Citi reportedly closed Capstone’s account citing anti-money laundering concerns, prompting the company to transfer $65 million to Wells Fargo. At Wells, Capstone maintained a brokerage account with money market funds and U.S. Treasuries and a business account through which more than $700 million circulated between March and December 2025. Prosecutors state that excluding Treasury purchases, approximately $337 million was disbursed from the Wells Fargo account, with two-thirds traced back to recipients linked to Tether and Bitfinex.

Allegations also include that Capstone facilitated the funneling of illicit funds into cryptocurrency by quickly converting deposits into USDT stablecoins and transferring them to foreign counterparts. This activity led prosecutors to contend that Capstone operated an unlicensed money-transmitting business in at least six states, a felony under state law.

After the fund freezes, EQIBank reportedly engaged voluntarily with DoJ investigators, providing three hours of information about clients and transaction sources, without the presence of U.S. legal counsel, and identifying additional Capstone accounts.

Representatives from the Department of Justice, Citi, Wells Fargo, and JPMorgan Chase declined to comment. DBS Bank stated it does not discuss individual clients but confirmed it has no appetite for involvement with illicit funds. Sources indicate DBS has not offered bank accounts to Tether.

The case underscores ongoing challenges faced by stablecoin issuers like Tether in accessing traditional banking services due to regulatory scrutiny, despite holding substantial U.S. government debt securities and playing a significant role in the cryptocurrency financial infrastructure.