Invest2 publishers3 min readPublished
US bank accounts held $83 million of the $84.2 million DOJ seeks from a Tether-linked processor
DOJ is seeking $84.2 million from Tether-linked processor Capstone, almost all of it held in Wells Fargo and JPMorgan accounts with just $1.1 million in USDT. The Dominica bank behind Capstone says losing the funds could liquidate it, while Tether puts its exposure under 0.034% of assets.
The Investor · Invest desk
What happened
- The Justice Department filed a civil forfeiture complaint on July 15 in California seeking $84.2 million tied to Capstone, a Montana payments firm it says moved money for Tether without a licence.
- Tether confirmed EQIBank handled its USDT purchase and redemption wires and put its own exposure at under 0.034% of group assets.
- Capstone and EQIBank have filed an innocent-owner defense to recover the seized money.
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Why it matters
- cost If the government keeps the money, the smallest balance sheet in the chain, EQIBank, absorbs the loss, and the issuer barely registers it.
- constraint A liquidated EQIBank would take out a bank Tether used for USDT purchase and redemption wires, forcing that dollar traffic onto other banks.
- precedent Building the case on a licence and bank balances gives prosecutors a way to reach stablecoin flows at the banks that fund minting and redemption, independent of any token freeze by the issuer.
- contradiction Tether's stated ceiling comes in below the government's claim, leaving open whether other EQIBank customers' dollars are inside the seized accounts.
Wells Fargo accounts in Capstone's name held $80.97 million of the total, and $79.11 million of that came from a single Wells Fargo Securities account on September 14 [3][7]. Add $2.06 million at JPMorgan Chase and the bank share comes to $83.03 million, or 98.6% of the $84.2 million sought [1]. The two USDT wallets held about 1.3% [2]. Prosecutors allege Capstone moved money in at least six states without a money-transmitter licence while telling banks it was an IT services company [2].
The narrowest reading of that concentration is that a processor directed by the bank that handled Tether's USDT purchase and redemption wires [6][7] would hold its float in dollars most of the time. A broader reading is that US enforcement against stablecoin activity is running through the fiat leg, where licences and bank accounts are subject to US courts. The third is that one complaint proves nothing about a trend. I think the first two are both right, within the limit the third sets: this filing reached USDT activity almost entirely through Wells Fargo and JPMorgan [1], and it is one filing. Later cases in which prosecutors seize stablecoin balances at scale would undercut the broader reading. In this one, the wallets yielded about $1.1 million [3].
On Tether's books the sum is small. The issuer reported $187.75 billion of assets at the end of the second quarter, $4.11 billion more than its liabilities, and $1.5 billion of net operating profit for the quarter [9]. The full $84.2 million is about 5.6% of that quarter's profit and 2% of the buffer [3]. EQIBank is at the other end of the scale. The bank has warned that losing the funds, roughly 80% of everything it holds, could push it into liquidation [6]. If that 80% refers to the whole $84.2 million, the bank holds about $105 million in total [4].
Tether's own figure leaves a gap. A spokesperson put the group's exposure at under 0.034% of assets [8]. Applied to $187.75 billion, that ceiling is about $63.8 million, roughly three-quarters of the government's claim [5]. Either the group's asset base is larger than the attested figure, or Tether does not count all of the seized money as its exposure. The statement did not say which.
Tether said it had "no knowledge of the conduct by Capstone alleged by the Department of Justice" [7]. An attorney for Capstone's owners, Kotaro Shimogori and Mary Jeanne Thompson, said the company "denies any wrongdoing" and hopes to "resolve this matter quickly," according to the Financial Times [5]. Civil forfeiture lets the government keep funds tied to an alleged crime without convicting their owner [4]. Under Supplemental Rule G, a claimant has 21 days to answer the complaint once a formal claim is filed [11].
What to watch
- Whether the court accepts the innocent-owner defense and returns any of the $84.2 million to Capstone or EQIBank.
- Whether EQIBank goes into liquidation, and which bank takes over Tether's USDT purchase and redemption wires.