Tether: The Latest Cryptocurrency to Suffer Hack

Blockchain & E-Transactions Law

The cryptocurrency Tether has recently announced that it has been the target of a hack causing the loss of approximately $30 million worth of its tokens.

In response to the hack, Tether provided the following statement, "$30,950,010 USDT was removed from the Tether Treasury wallet on November 19, 2017 and sent to an unauthorized bitcoin address. As Tether is the issuer of the USDT managed asset, we will not redeem any of the stolen tokens, and we are in the process of attempting token recovery to prevent them from entering the broader ecosystem." In addition, Tether has identified the address where the hacked tokens are being held and announced that such tokens will not be eligible for redemption of US dollars.

While it uses blockchain technology, Tether differs from most cryptocurrencies because it acts as a proxy for national currencies and can be sent between various bitcoin exchanges. According to Tether, every token is backed by traditional currency. Thus, pursuant to Tether, one of its US dollar-pegged tokens is worth the equivalent of one US dollar.

One of the bitcoin exchanges on which Tether is used is Bitfinex. Several sources have reported a relationship, specifically a common ownership, between Tether and the unregulated bitcoin exchange Bitfinex, which is based out of the British Virgin Islands. Bitfinex has also recently had issues with cryptocurrency hacks. In August of 2016, Bitfinex suffered a hack that resulted in the reported loss of approximately 120,000 bitcoins.

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