Published: Wed, November 22, 2017
Economy | By Melissa Porter

Cryptocurrency Startup Tether Hacked: Attackers Take $31 Million Worth Of Bitcoin

Cryptocurrency Startup Tether Hacked: Attackers Take $31 Million Worth Of Bitcoin

The company, which helps exchanges convert fiat currency into tokens and aims to serve as a proxy for the US dollar, said in a statement on its website that $30,950,010-worth of its cryptocurrency USDT was taken from its treasury wallet on November 19 and sent to an unauthorized bitcoin address.

The panicked response to the Tether hack occurred against a backdrop of suspicion that had been brewing for some timesuspicion regarding the relationship between Tether (a cryptocurrency supposedly pegged to the US Dollar) and the Bitfinex exchange.

Almost $31 million worth of bitcoin currency was wiped off from cryptocurrency startup Tethers' Treasury account. The company said it's trying to prevent the stolen coins from being used.

Coindesk also reported that Tether had links to Bitfinex - a Hong Kong-based exchange that reported a hack a year ago blamed for about $65m of losses - although the report added that the "nature of the connection" was unclear. That keeps its value predictable, but presents a problem if a token is stolen from one of the company's "treasury" wallets.

Tether, the company behind a cryptocurrency pegged to the U.S. dollar, said $31 million stolen from its main wallet on Sunday. It's likely to fuel the debate on Wall Street over whether digital coins are secure enough to enter the mainstream of finance. Anti-money laundering and know-your-customer rules have prevented many bitcoin exchanges from opening bank accounts needed to hold fiat currencies.

These kinds of hijacking and attacks have prompted as a grave threat for the overall cryptocurrency community and market; the recent Russian hacking and the other notable malware that have been reported lately managed to drain down most of the digital currencies' prices.

Tether has released the details of the attack and precautionary measures on its website for its users.

"If tether is actually fundamentally compromised, that will be a very big issue for many exchanges", Arthur Hayes, chief executive officer of BitMEX, a cryptocurrency derivatives venue in Hong Kong, told Bloomberg. "The knee-jerk reaction was that fear".

The company then urged its partner exchanges, or those integrated with the Tether service, to "take immediate action" in order to "prevent further ecosystem disruption". That view may explain why bitcoin recovered some of its initial losses.

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