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Tether said this week that assets it holds at EQIBank amount to less than 0.034% of the group's total, after US prosecutors seized roughly $84.2 million from accounts linked to payments firm Capstone Ltd. EQIBank, a Dominica-licensed digital bank, processed wire transfers for Tether connected to USDT purchases and redemptions. Tether is not charged with any wrongdoing.
A company spokesperson said Tether had no knowledge of the conduct that the Department of Justice alleges against Capstone. Tether confirmed the banking relationship but did not disclose a dollar figure for its exposure.
The seizure targets Capstone's accounts rather than Tether's reserves directly. EQIBank, which used Capstone to reach the US banking system, says the freeze covers around 80% of its monetary holdings and could push it into liquidation.
The disclosure does not point to any threat to USDT's backing. It points at the layer beneath it: the correspondent banking chain that moves customer money in and out.
Key Takeaways
- US prosecutors seized about $84.2 million from Capstone-linked accounts and wallets.
- Tether says its EQIBank exposure is under 0.034% of group assets.
- EQIBank says the seizure covers roughly 80% of its monetary holdings.
- Tether has not been charged and says it knew nothing of the alleged conduct.
- A federal judge denied EQIBank's motion to recover the funds on procedural grounds.
What Was Actually Seized
A September 14, 2026 federal court order itemises the property. It lists about $79.11 million from a Wells Fargo Securities account held in Capstone's name, $1.86 million from a second Wells Fargo account, and roughly $2.06 million at JPMorgan Chase.
The order also names about 1.12 million USDT from one address and 54,578.45 USDT from a second. Combined at the dollar peg, the listed property comes to roughly $84.2 million.
EQIBank describes its loss differently, citing around $89 million. The gap between the two figures has not been reconciled publicly, and the court filing is the more precise of the two.
What Tether Said, and What It Did Not
The 0.034% figure applies specifically to assets held at EQIBank. Against the $187.75 billion in group assets Tether reported for the quarter ending June 30, that implies an upper bound of roughly $64 million.
Tether has not published a breakdown of its deposits across offshore banks, so the statement answers the EQIBank question without addressing the wider one. Its excess reserve buffer stood at $4.11 billion at the end of June, down from $8.23 billion three months earlier.
This is the kind of gap the US framework is moving to close for regulated issuers. The Federal Reserve proposed monthly reserve reports certified by chief executives and chief financial officers this week, which we covered in our report on the Fed reserve proposals.
What Prosecutors Allege
The Department of Justice filed a civil forfeiture complaint on July 15, 2026 in the US District Court for the Eastern District of California. Prosecutors allege Capstone operated as an unlicensed money transmitter in at least six states while presenting itself to banks as an ordinary technology services company.
Court documents describe EQIBank, which had no direct Federal Reserve account, as standing behind Capstone and directing how the processor moved money. Prosecutors also allege that a cyber-fraud group used Capstone's accounts to move stolen funds, with some converted into USDT.
Capstone's owners were identified in the filings as Kotaro Shimogori and Mary Jeanne Thompson, and the FBI searched a California residence. Their attorney said the company denies any wrongdoing and intends to challenge the complaint. None of these allegations has been tested at trial.
Registration status sits at the centre of the allegations, which is a useful reminder that the paperwork layer is not a formality. Forming the entity is the cheap first step, and you can register your FREE LLC today, but a company confers no money transmission authority on its own. The licences come afterwards and state by state, and that distinction is exactly what this case turns on.
EQIBank Says It Faces Collapse
The bank filed to recover the funds, arguing it was an innocent owner that Capstone had misled about its registration and operations. Judge Dale A. Drozd denied the motion on July 16, a procedural ruling that followed the filing of the forfeiture case the day before and turned on the court's equitable jurisdiction.
EQIBank warned publicly on September 9 that continued loss of the funds could force it into liquidation. Under the rules governing these cases, a claimant has 21 days to answer the government's complaint once a formal claim is filed.
The question of who absorbs the loss when authorities block funds has come up repeatedly this month. Russia told its own investors they will bear it, which we covered in our report on Russia's freeze warning.
The Layer Nobody Audits
Attestations cover what an issuer holds. They do not cover the chain of processors and correspondent banks that move customer dollars into and out of those holdings.
Capstone is exactly that kind of intermediary: a firm most USDT holders had never heard of, sitting between an offshore bank and the US banking system. A payments processor failing does not break a peg, but it can interrupt the redemption path that makes the peg credible.
That is the durable lesson here, independent of how the forfeiture case resolves.
For a business, the practical response is to shorten that chain rather than try to audit it. Conventional regulated multi-currency accounts hold funds directly and settle across borders, some of them returning 2% cashback on eligible transactions, with no unnamed processor sitting in the middle. Fewer intermediaries is the only dependable way to reduce the kind of exposure this case illustrates.
Why It Matters Beyond Tether
The same enforcement posture applies to any issuer relying on offshore or thinly regulated banking partners for fiat movement. The GENIUS Act framework addresses reserve composition and custody, but the processor layer sits largely outside it.
The timing is also awkward for policy. Washington is reported to be weighing an initiative to spread dollar stablecoins abroad, which we covered in our report on the overseas dollar push, while US prosecutors move against the offshore banking rails those tokens currently run on.
FAQs:
1. What did Tether say about EQIBank?
Tether confirmed that EQIBank provided it with banking services, including processing wire transfers linked to USDT purchases and redemptions, and said assets held there represent less than 0.034% of group assets. It also said it had no knowledge of the conduct prosecutors allege against Capstone, and it did not disclose a dollar amount.
2. How much was seized and from where?
A September 14, 2026 court order lists about $79.11 million from a Wells Fargo Securities account in Capstone's name, $1.86 million from another Wells Fargo account, roughly $2.06 million at JPMorgan Chase, and about 1.17 million USDT across two addresses, totalling roughly $84.2 million. EQIBank separately cites around $89 million.
3. Is Tether accused of wrongdoing?
No. Tether has not been charged in this matter. The civil forfeiture complaint filed on July 15, 2026 targets accounts linked to Capstone Ltd., and Tether's connection is that EQIBank, which used Capstone, processed wire transfers for it.
4. Does this affect USDT's backing or peg?
The disclosed exposure does not suggest an immediate threat to USDT's reserves or its dollar peg. Tether reported $187.75 billion in group assets for the quarter ending June 30, against which an exposure of under 0.034% is small. The case instead highlights counterparty risk in the banking chain issuers use to process deposits and redemptions.
5. What happens next in the case?
EQIBank's motion to recover the funds was denied on July 16 on procedural grounds after prosecutors filed the forfeiture complaint. Capstone and EQIBank have filed an innocent-owner defence, and claimants have 21 days to answer the government's complaint once a formal claim is filed with the court.
Disclaimer:
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