US Seizes $84M from Capstone Over Alleged Illegal Transfers for Tether and Bitfinex

The US government has taken action against Capstone Ltd., seizing $84.2 million in assets allegedly used for illegal banking transfers benefiting Tether and Bitfinex. The civil forfeiture complaint, filed on July 15, targets accounts at Wells Fargo and JPMorgan, with the majority of the seized funds, approximately $79.11 million, held in a Wells Fargo Securities account.

The government's case centers around EQIBank, a Caribbean institution that allegedly directed Capstone to move hundreds of millions of dollars on behalf of Tether and Bitfinex. According to the complaint, Capstone functioned as an intermediary allowing the two crypto companies to access US banking rails they might not have been able to use directly.

Tether has confirmed its exposure to EQIBank amounts to less than 0.034% of its total assets. This is not the first time Tether and Bitfinex have faced allegations about their banking relationships, having settled with the New York Attorney General's office in 2021 over claims that Bitfinex had covered up an $850 million loss using Tether's reserves.

With EQIBank facing potential liquidation due to US enforcement action, other small banks and payment processors in the space will likely take notice. For investors and traders, Tether's peg to the dollar has weathered far more serious crises than this forfeiture case.