U.S. federal prosecutors are seeking to seize $84.2 million connected to Capstone Ltd., a Montana-based payments firm, and its relationship with Dominica-based EQIBank. The Department of Justice has filed a civil forfeiture complaint alleging that Capstone operated an unlicensed money-transmitting business in at least six states while describing itself to banks as an IT services company.

The assets targeted by the government are spread across traditional bank and brokerage accounts as well as two USDT wallets. Capstone and EQIBank deny wrongdoing and have each filed innocent-owner defenses as the case moves forward.

How the funds are distributed

According to the complaint, the government is trying to forfeit $79.11 million held in a Wells Fargo Securities account, $2.06 million at JPMorgan Chase, and $1.86 million in another Wells Fargo account. Prosecutors are also seeking about $1.1 million held in two USDT wallets.

Taken together, those accounts and wallets make up the full $84.2 million now at issue in the civil case. The filing focuses on whether the funds are subject to forfeiture based on the government’s allegations about how Capstone conducted its payments business.

Core allegation against Capstone

The Justice Department claims Capstone functioned as an unlicensed money transmitter in at least six U.S. states. Prosecutors also allege the company represented itself to banks as an IT services provider rather than as a payments business.

That distinction is central to the government’s case. The complaint does not amount to a final finding, but it lays out the basis on which prosecutors say the assets should be forfeited.

Tether and EQIBank’s role

Tether confirmed that EQIBank processed transfers for the company, linking the case to one of the most prominent issuers in crypto payments. At the same time, Tether said it had no knowledge of the conduct alleged against Capstone.

Tether also said its exposure to the matter represents only a small fraction of the group’s assets. The source article did not indicate that prosecutors accused Tether itself of wrongdoing.

Defenses and what comes next

Capstone’s owners have denied wrongdoing and said they want to resolve the matter quickly. EQIBank has also challenged the seizure effort, and both Capstone and the bank have filed innocent-owner defenses in response to the forfeiture action.

EQIBank has warned that losing access to the funds could push it toward liquidation. The next confirmed step is the civil forfeiture process itself, where the court will weigh the government’s allegations against the defenses raised by Capstone and EQIBank.

Source: decrypt.co