Cryptocurrency startup Tether announced that an unknown hacker had stolen nearly $31m worth of digital currency from the firm. Tether issues USDT – digital tokens backed by its own reserves of fiat currencies such as dollar, euro and yen. The firm is now attempting to get the stolen funds back and also ensure that the hacker is prevented from spending the money.
Tether said the hacker stole the funds from the company's wallet on 19 November and moved it to an "unauthorised Bitcoin address." Fortunately, Tether was able to track down the Bitcoin address where the hacker transferred the stolen funds and has warned users to not accept any tokens sent from that address "as they have been flagged and will not be redeemable by Tether for USD".
"$30,950,010 USDT was removed from the Tether Treasury wallet on November 19, 2017 and sent to an unauthorised 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. The attacker is holding funds in the following address: 16tg2RJuEPtZooy18Wxn2me2RhUdC94N7r," Tether said in a statement.
The firm also said that as a temporary fix, it has issued an updated build of its Omni software, which will essentially blacklist the hacker's Bitcoin address that holds the stolen funds.
Bloomberg reported that shortly after the hack, the price of Bitcoin dropped by as much as 5.4%, only to later hit a record high. Despite the fact that Tether is reportedly the world's 20th most-valuable digital currency, sceptics have been uncertain about Tether's viability. These concerns have reportedly been renewed following the hack.
"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 Tether hack is the latest in a long line of cryptocurrency heists. Motherboard reported that an Ethereum startup called Confido, mysteriously vanished after it raised $374,000 from investors. Earlier this month, popular cryptocurrency wallet Parity was hacked and nearly $1m worth of Ethereum was frozen.