NEW YORK, Sept 25 (Reuters) - US prosecutors in California have seized millions of dollars from bank accounts and cryptocurrency wallets tied to a Montana payments company reportedly linked to Tether.
Owners of Capstone, which acted as a money services business, misrepresented the business as an information technology company to banks including Wells Fargo and JPMorgan Chase when opening accounts, federal prosecutors said in a civil forfeiture filing.
Capstone, registered for business in Montana, processed numerous payments on behalf of two crypto companies through an agreement with a bank in Dominica, prosecutors said in a July filing that was reported by The Information on Thursday.
Tether confirmed in a statement it was a customer of the bank but was unaware of Capstone’s alleged fraud.
According to prosecutors, Capstone engaged in a scheme to bilk victims out of cash by pretending to be FBI agents. It then converted the proceeds to crypto, prosecutors said.
“Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice,” the spokesperson said, noting its assets held at the bank were limited.
The Justice Department in court filings did not allege any wrongdoing by the other firms.
It seized nearly 2 million from an account with JPMorgan, court filings said. Another roughly $1.2 million worth of Tether’s dollar-pegged token was also seized.
Spokespeople for Wells Fargo and JPMorgan declined to comment.
The Department of Justice filed a civil forfeiture complaint on July 15 in the Eastern District of California targeting approximately 79.11 million, sat in a Wells Fargo Securities account; smaller sums were held at JPMorgan Chase and in two USDT wallets. Behind Capstone sits EQIBank, a Dominica-licensed digital bank that prosecutors say directed how the processor moved money. EQIBank has warned that losing those funds — roughly 80% of everything the bank holds — could push it into liquidation.
Civil forfeiture is a legal process that lets the government seize funds tied to an alleged crime without a criminal conviction against the money’s owner.