The FT reported, citing unnamed sources, that the two firms are stablecoin issuer Tether and its affiliated exchange Bitfinex.
Capstone illegally moved money at the direction of Dominica-based bank EQIBank, the report said, citing a civil justice complaint filed by the Justice Department in California.
Justice Department prosecutors in the Eastern District of California froze $84 million in Capstone’s accounts at two banks, and the FBI executed a search warrant at the Sacramento, California, home of Capstone owners or controlling persons Kotaro Shimogori and Mary Jeanne Thompson, per the report.
Tether and Bitfinex told the FT, per the report, that they had “no knowledge of the fraudulent conduct by Capstone alleged by the DoJ” and that their “assets held at EQI are limited.”
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A Tether spokesperson told PYMNTS in a subsequent email that “Tether’s exposure to EQIBank is minimal, amounting to less than 0.034% of the group’s total assets.”
A lawyer for Capstone said, per the report, that Capstone “denies any wrongdoing and plans to challenge the government’s civil asset forfeiture complaint and its allegations by filing a motion to dismiss shortly. Capstone has cooperated with the government’s investigation and hopes to resolve this matter quickly.”
EQIBank did not comment in the FT article and did not immediately reply to PYMNTS’ request for comment.
According to the FT report, EQIBank filed a motion seeking the seized funds, arguing that it was misled by Capstone and believed Capstone was “properly registered.”
The Justice Department’s complaint also alleges that Capstone helps scammers who engaged in impersonation fraud convert stolen cash into stablecoins, according to the report.
The complaint alleges that because Capstone turned the stolen cash into crypto and transferred the crypto, minus fees, to a foreign counterparty, the company operated an unlicensed money-transmitting business in at least six states in which doing so is a felony.
There is no suggestion that Tether, Bitfinex or EQIBank were aware of the alleged impersonation fraud, per the report.
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