Daily News 19

Tag: U.S. Department of Justice

  • Tether Confirms Minimal EQIBank Exposure After $89M US Asset Seizure

    Tether Confirms Minimal EQIBank Exposure After $89M US Asset Seizure

    Key Highlights

    • Tether confirms exposure to EQIBank is less than 0.034% of total group assets, approximately $64 million based on its June 2024 attestation of $187.75 billion.
    • U.S. authorities seized funds from Capstone, a payment processor used by EQIBank to move customer money through Wells Fargo and JPMorgan Chase accounts, alleging misrepresentation of business activities.
    • Tether states it had no knowledge of the alleged conduct by Capstone cited in the Department of Justice civil forfeiture case.

    Tether Limits EQIBank Exposure Amid U.S. Asset Seizure

    Stablecoin issuer Tether has moved to reassure markets regarding its exposure to EQIBank, a Dominica-licensed lender caught in a U.S. law enforcement action. According to a company spokesperson, assets held at EQIBank represent less than 0.034% of Tether’s total group assets. Based on the firm’s June 2024 attestation reporting $187.75 billion in consolidated assets, that percentage translates to roughly $64 million at risk. The disclosure comes after reports by the Financial Times and The Information detailed a U.S. asset seizure that could potentially force EQIBank into liquidation.

    Capstone Payment Processor at Center of Civil Forfeiture Case

    The regulatory action centers on Capstone, a U.S.-based payment processor that EQIBank utilized to hold funds and facilitate customer money movements through correspondent banking accounts at Wells Fargo and JPMorgan Chase. Court filings indicate that U.S. prosecutors seized funds from those Capstone accounts and filed a civil forfeiture complaint. The Department of Justice alleges that Capstone misrepresented the nature of its business to the banking institutions involved, a characterization that triggered the enforcement action and the subsequent freezing of assets flowing through the processor’s channels.

    Tether Denies Prior Knowledge of Alleged Misconduct

    In a statement provided to CoinDesk, a Tether spokesperson explicitly distanced the company from the allegations facing Capstone. “Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice,” the spokesperson said via email. The company further clarified that its assets held at EQIBank were limited to “less than 0.034% of the assets of the group,” though it declined to specify the exact dollar figure. The response underscores Tether’s effort to contain reputational fallout as the stablecoin giant navigates heightened scrutiny over its reserve composition and banking partnerships.

    Why This Matters

    The episode highlights the persistent counterparty and banking-layer risks inherent in the stablecoin ecosystem, even for the largest issuer by market capitalization. Tether’s reserve attestations have historically shown a mix of cash, Treasury bills, and other assets held across a network of global financial institutions. The EQIBank situation illustrates how enforcement actions against second- or third-tier payment processors—entities often invisible to end users—can create sudden liquidity constraints for custodial partners. For the broader digital asset industry, the case reinforces regulatory focus on the “on-ramp/off-ramp” infrastructure connecting crypto markets to the traditional financial system, particularly regarding anti-money laundering compliance and know-your-customer obligations at the payment processor level. Market participants will likely monitor whether other stablecoin issuers disclose similar exposures and how EQIBank’s potential liquidation proceedings unfold in the coming weeks.

    Frequently Asked Questions

    How much money does Tether have at risk in EQIBank?
    Based on Tether’s June 2024 group asset figure of $187.75 billion and the disclosed exposure limit of less than 0.034%, the at-risk amount is approximately $64 million. Tether has not provided an exact dollar amount.
    What triggered the U.S. seizure of funds connected to EQIBank?
    The U.S. Department of Justice seized funds from accounts held by Capstone, a payment processor used by EQIBank, at Wells Fargo and JPMorgan Chase. Prosecutors filed a civil forfeiture case alleging Capstone misrepresented its business activities to those banks.
    Did Tether know about Capstone’s alleged misconduct?
    No. A Tether spokesperson stated explicitly: “Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice.”
  • U.S. Department of Justice Issues Statement on Binance and Iran

    U.S. Department of Justice Issues Statement on Binance and Iran

    DOJ Seeks Seizure of $61 Million in Crypto Linked to Iranian Oil Sanctions Evasion

    The U.S. Department of Justice has filed a civil forfeiture lawsuit targeting approximately $61 million in cryptocurrency allegedly connected to the Iranian government and the Islamic Revolutionary Guard Corps (IRGC). The complaint, filed in the Southern District of New York, claims the digital assets represent proceeds from the illicit sale of sanctioned Iranian crude oil laundered through the cryptocurrency exchange Binance.

    Alleged Laundering Network Involves China-Based Firms

    According to the U.S. Attorney’s Office for the Southern District of New York, two China-based companies — Blessed Trust and Hexa Whale — used trading accounts on the UAE-based exchange Binance to facilitate the laundering operation. Authorities allege these firms helped convert proceeds from black market Iranian oil sales into cryptocurrency, moving funds through complex transaction networks designed to conceal their origin.

    The complaint details how Blessed Trust presented itself to financial and crypto service providers as an asset management and digital asset custody company. In reality, prosecutors say it transferred funds derived from Iranian crude oil and petroleum product sales. The firm allegedly offered services converting fiat currency into cryptocurrencies utilizing U.S.-based crypto issuers.

    Hexa Whale reportedly operated under the guise of a commodities brokerage but conducted similar transactions with Blessed Trust and affiliated parties. Both companies reportedly served clients in the Chinese oil and petroleum sector.

    $1.5 Billion in Illicit Oil Revenues Tracked

    Investigators identified a cluster of interconnected cryptocurrency addresses dubbed “Entity A” that allegedly received and distributed over $1.5 billion in funds from sanctioned Iranian oil sales. Transfers from these addresses reportedly went to money-handling companies linked to the IRGC, other crypto addresses, and an Iran-based cryptocurrency exchange.

    Prosecutors allege Blessed Trust and Hexa Whale used sophisticated crypto transfer networks and address clustering to obscure the nature, source, and true ownership of transactions. The scheme allegedly facilitated tens of millions of dollars in transfers through the U.S. financial system.

    Officials Emphasize Sanctions Enforcement and Crypto Tracing

    Assistant U.S. Attorney Sean S. Buckley stated that the Iranian government uses its sanctioned oil sales to finance its military and operations in the region, and that the investigation alleges that cryptocurrency actors in China and other countries played a role in laundering more than $1.5 billion in illicit oil revenues.

    FBI New York Field Office Deputy Director James C. Barnacle Jr. stated that the operation demonstrated the ability to track cryptocurrency networks used to circumvent sanctions, and that cutting off funds from black market oil sales aimed to reduce the financing capacity of the Iranian military and related entities.

    The IRGC has been designated as a foreign terrorist organization by the United States. The forfeiture action seeks to disrupt financial pipelines supporting Iranian state activities and proxy operations across the Middle East.

    This article is for informational purposes only and does not constitute investment advice.