Tether: What the Hack?

by CryptoCheets — on

On Tuesday 21st at 3:30 am UTC, Tether announced that an unauthorized transaction of $30,950,010 USDT was sent to the wallet address 16tg2RJuEPtZooy18Wxn2me2RhUdC94N7r from the Tether Treasury wallet by an external attacker.

What is Tether?

Tether is the cryptocurrency that is backed by fiat currency, which means that $1 USD₮ is equivalent to $1 USD. This facilitates the transfer of this kind of digital-asset from one blockchain to another. The idea is that Tether, the company, has a reserve with the same amount of USD as there are USD₮’s in circulation. They have an excellent transparency policy as they publish their reserve holdings daily, which are regularly audited by professionals. This concept protects traders and investors from the volatility that cryptocurrency is sometimes known to have. With Tether, traders and investors are able to convert their cryptocurrency easily and safely to USDT rather than Bitcoin or Ethereum, which can also be volatile.

They also have EUR₮ backed by the Euro, and soon they will integrate JPY₮ backed by the Japanese Yen. Tether plans on expanding to other fiat currencies in the future.

What the Hack?

As mentioned earlier, approximately $30M USD₮ has been stolen from the Tether Treasury wallet on the 19th of November 2017. They have taken measures by creating new builds for Omni Core, the software used to support Layer transactions, which flags the tokens stolen, preventing any redemption of said tokens. This hard fork will later be corrected by another protocol upgrade, once they find a way to secure the lost tokens and return them to the treasury.

How Did the Market React?

Generally, the market saw a dip in the hour following the announcement with Bitcoin going back down to $7762.71 USD, but it quickly recovered. As for Tether, the hard fork flagged the stolen tokens and will recover them. The USD₮ is a very useful currency and its adoption isn’t expected to waver in the wake of this hack.

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