The U.S. government has seized bank account assets belonging to a California company, exposing the risk that Tether still depends on unstable financial intermediaries for transactions.
On the surface, the world's largest stablecoin issuer Tether appears to have become a powerful force in the global financial system. The company holds more than $100 billion in U.S. Treasury securities, most of which are custodied by investment bank Cantor Fitzgerald. Cantor Fitzgerald was previously led by current U.S. Commerce Secretary Howard Lutnick.
However, the U.S. government's recent seizure of bank account assets belonging to an obscure company headquartered in Sacramento, California, has exposed that Tether still relies on a series of sometimes unstable financial intermediaries to complete transactions. The reason is that Tether has long faced difficulties opening accounts directly at large U.S. banks, forcing it to connect to the traditional banking system through third-party institutions. This also exposes Tether to the problems of these intermediaries themselves.
The Relationship Between EQIBank and Tether
According to people familiar with the matter, one of these intermediaries is Caribbean-based bank EQIBank. Tether had used EQIBank to process wire transfers involving customers buying and selling Tether stablecoins. However, because EQIBank is a foreign bank, it needs to rely on payment service providers within the United States to access the U.S. banking system. As a result, EQIBank used another company — Sacramento-based Capstone Limited — to hold funds and transfer customer money.
According to court documents, Capstone opened accounts at large banks including Wells Fargo and JPMorgan Chase, and held EQIBank funds through these accounts. It was precisely the assets in these accounts that the U.S. Department of Justice seized in July.
According to a complaint filed by U.S. government attorneys with the U.S. District Court for the Eastern District of California, the funds in these accounts amounted to approximately $90 million.
Capstone Alleged to Have Concealed the Nature of Its Business
According to court documents, Capstone told U.S. banks that it was an information technology company. In reality, however, the company used bank accounts to transfer millions of dollars on behalf of a bank and a stablecoin company. People familiar with the matter confirmed that the bank involved was EQIBank, and the stablecoin company was Tether.
EQIBank has filed a lawsuit seeking to recover the assets seized by the government. The bank stated in court documents that the seized funds account for approximately 80% of its total assets, and that the action has put the bank at risk of collapse. EQIBank also stated that it is the "innocent owner" of these funds.
The bank said in the documents: "EQIBank is not a rogue bank that openly handles funds for drug cartels or U.S. sanctions targets." EQIBank stated that the U.S. government has indicated that EQIBank itself is not a target of the investigation, nor has the government said that any of the bank's depositors are targets of the investigation.
Tether's Response
Tether confirmed in a written statement that the company is indeed a customer of EQIBank. A Tether spokesperson said: "Tether is not aware of the relevant conduct the Justice Department has alleged against Capstone."
"The assets Tether holds at EQIBank are limited in size, accounting for less than 0.034% of the group's assets."
According to data published by Tether as of June 30, the company's total assets were $187.8 billion. Based on this calculation, Tether's assets at EQIBank amount to approximately $64 million.
Tether stated that the company has sufficient funds to cover any potential losses. As of the end of June, Tether reported that its assets exceeded the liabilities corresponding to issued USDT tokens by approximately $4.1 billion.
A lawyer representing Capstone said the company denies any wrongdoing and plans to challenge the government's seizure action. Brian Klein, a partner at Cooley LLP, said: "Capstone has been cooperating with the government's investigation and hopes to resolve this matter as soon as possible."
The Course of the Capstone Matter
Court documents show that EQIBank sought to access the U.S. banking system through Capstone in 2024. Capstone told EQIBank that the company already had accounts at large U.S. banks and could help the bank's clients transfer funds.
According to court documents, Capstone told EQIBank that it was a "legitimately registered" money services business and maintained partnerships with multiple banks. Capstone did indeed register with the U.S. Financial Crimes Enforcement Network (FinCEN) as a money services business.
The problem, however, is that Capstone did not disclose to U.S. banks that it was actually a money services business. The U.S. government stated in court documents that Capstone gained access to the U.S. financial system through "repeated false statements." For example, when banks asked whether it handled funds on behalf of other parties and whether "virtual currency" was among the enterprise's high-risk attributes, Capstone answered "no" in both cases.
The U.S. government believes that because Capstone did not disclose that it was engaged in the money transmission business, it evaded additional scrutiny imposed on money transmission enterprises. The government also alleged that Capstone transferred certain funds that it knew originated from fraudulent activity.
Banks Discover Abnormal Transactions
Capstone's relationship with the U.S. banking system began to deteriorate. Court documents show that in May 2025, Citi discovered anomalies during a routine review of Capstone transactions. Concerned about potential money laundering risks, Citi closed Capstone's accounts. Subsequently, Capstone moved some funds and wire transfer business to Wells Fargo.
Court documents state that Wells Fargo discovered Capstone's FinCEN registration information last year. At the same time, JPMorgan Chase found that multiple transactions entering Capstone accounts involved suspected identity impersonation fraud victims. Citi declined to comment. Wells Fargo and JPMorgan Chase did not immediately respond to requests.
Involvement in Cryptocurrency Fraud Investigation
Court documents submitted by the U.S. government show that in one case: Capstone told JPMorgan Chase that a transaction involved software licensing fees. But a Capstone executive later told Miami Beach police that the transaction actually involved the purchase of Tether stablecoins.
In February of this year, the FBI searched the residence of Capstone founder and Sacramento entrepreneur Kotaro Shimogori. Investigators alleged that he used the company's bank accounts to operate a "crypto-for-cash scheme." The U.S. government said that identity fraud victims transferred funds into Capstone bank accounts, and Capstone then transferred equivalent cryptocurrency to third parties.
Tether Strengthens Banking Partnerships
Tether has been trying in recent years to expand its own banking partnership network to reduce the risks brought by similar incidents. Last year, Tether participated in an investment in Pave Bank. The bank holds a banking license issued by the National Bank of Georgia. The funding round amounted to $39 million and was led by venture capital firm Accel.
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