Cryptocurrency startup Tether claims it was robbed of $31 million in tokens

Posted November 24, 2017

Tether is not exactly a big player in the cryptocurrency scene, like bitcoin or Ethereum are. One tether is equal to a dollar.

While many cryptocoins seek to transcend conventional currency, the cryptocurrency Tether claims to back each of its issued tokens with an equal amount of redeemable cash held in a private reserve. Unlike other digital currencies that fluctuate wildly against dollar, Tether is created to protect investors from that volatility while still enabling them to benefit from the Blockchain-based assets.

The company said it's in the process of attempting token recovery so that the stolen funds don't find their way into the broader ecosystem. Again, any tokens from the attacker's address will not be redeemed. Once this protocol enhancement is complete, the Omni Foundation will provide updated binaries for all integrators to install.

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While Tether has been able to identify the address in which the hacker is holding those stolen funds, it hasn't yet understood how the attack took place. We strongly urge all Tether integrators to install this software immediately to prevent the coins from entering the ecosystem. "The only tokens that will not be redeemed are the ones that were stolen from Tether treasury yesterday".

According to a now deleted post on its website, Tether said a "malicious action by an external attacker" resulted in the theft, CoinDesk said.

We will provide further updates as they come available, and we appreciate the community's patience, understanding, and support while we work to rectify the situation in the best possible manner to everyone's benefit.

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The company added that it has flagged the tokens, which means it intends to track them in order to prevent the holder from exchanging them through its service. Tether said that the software will issue a change to the consensus protocols that Omni Core clients now utilize; indicating that the fix "is effectively a temporary hard fork". This update is meant to prevent the stolen coins from being a part of the system again by locking them into the hacker's wallet.

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.

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