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$31 Million Tether CryptoCurrency Hack – Bitcoin Price Stable

$31 Million Tether CryptoCurrency Hack – Bitcoin Price Stable

There has been a major hack which affected cryptocurrency markets, but only briefly. The Cryptocurrency firm tether, lost $31 million USD worth of it’s own token, USDT.

Tether is a proxy for US dollar trades, which is sent between exchanges, including bitfinex, polonex, etc.

The Bitcoin price was briefly affected, as price dropped to $7762, but quickly recovered to $8,100. The coindesk chart below shows the dip and recovery:

It seems like even a hack of this size has not dampened Bitcoin’s price rise, the hack is separate from Bitcoin itself, but the problem stems from the fact this token is used between cryptocurrency exchanges as a proxy for the US dollar. This caused traders to become nervous, but did not affect Bitcoin as a whole.

The purpose of tether, is to ‘peg’ itself to the US dollar and be backed by US dollars, to give a quick means of transaction from fiat money to digital currency. This allows exchanges to transact on USD markets, without even needing a bank account.

The coins were taken from Tether’s main treasury wallet, in three seperate transactions, in order of: 23,000,000 then another of 7,900,000 and then a final 500,000 of USDT.

This attack has also come at a time when there has been speculation that each USDT token may not even be backed by the equivalent dollar amount, but this is only speculation, there is also speculation that Tether is being used to drive up the price of bitcoin, see this article.

Tether themselves claim that the $673 million market cap worth of Tether is backed by US dollars, if this is the case they would need an equivalent of this in it’s Taiwan based bank account.

It does not seem to have affected the price of Bitcoin thus far, but be aware that as this is the medium of exchange between exchanges, there could yet be problems under the hood.