Tether cryptocurrency hack – top tweets that shed light [UPDATED]

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Tether, a “USD equivalent” cryptocurrency used by many exchanges and issued by tether_to (company very closely related to the Bitfinex exchange) got hacked on November 21st 2017. Supposedly hacked, that is.

There was a lot of negative publicity around Tether (USDT) lately, most of it coming from traders, expert cryptocurrently users and other authority actors. We’ve covered problems with Tether previously (1, 2, 3, 4), so just to re-cap, once again these are the main speculations about Tether that have not been disproved by neither Tether nor Bitfinex:

  • Bitfinex/tether is likely to have no proper banking ever since they lost US banking
  • Tethers are most likely not backed by equivalent amount of US dollars
  • Tethers withdrawals into US dollars are problematic (which should be so as per Tether terms)
  • Tether/Bitfinex are issuing unbacked Tether tokens to manipulate crypto prices

If you need more catching up, read Bitfinex’ed on Medium or on Twitter.

The public dissent was heating up so much by the end of November that the drama was outshining the faded BCash shilling that seemed to cool down after the canceled hard fork. So many questions were asked that Bitfinex was going to issue an official statement about the situation:

Always ask for evidence before drawing conclusions. We are grateful to those who have defended against these reckless allegations. A formal announcement is forthcoming. 2/2

— Bitfinex (@bitfinex) November 19, 2017

…and the announcement indeed came the next day, being the Tether “hack” announcement:

Tether Critical Announcement @Omni_Layerhttps://t.co/clGVQweq5A

— Tether (@Tether_to) November 21, 2017

Ironically, the timing was perfect. In fact, the whole $30 million hack went on so smoothly in one day that very few people expressed any compassion for Tether. On the contrary, people started noting weird patterns:

Some interesting observations:

1. This #Tether “treasury” wallet was only created on the same day the hack took place
2. A 7,900,000 amount was sent *to* the Treasury wallet literally seconds before the hack begun

— Jackson Palmer (@ummjackson) November 21, 2017

Nearly everyone taking a critical look at the story immediately suspected it’s an inside job:

Is this evidence that the tether “hack” was an inside job? @MadBitcoins@ToneVays@jimmysonghttps://t.co/e6yxqbIZc2

— TheDesignFlaw (@TheDesignFlaw) November 21, 2017

nah, that was a inside job of bitfinex / tether. everybody could send funds to that address to blame that hacker.

— Cryptofeel [Buy the fukin dip] (@cryptofeel)November 21, 2017

Apparently the hack was an inside job, and the hack was done by the same people who did it last time…so last time BitFinex robbed its own customer’s funds and replaced them with Tether and then kicked off a ponzi pump to raise the value of the stolen coins?

— Mike Hunt #DontGetTethered (@PiRaticus) November 21, 2017

This story makes the most sense looking at timestamps RE: #Tether hack. Strange a multi-sig was used for intermediary wallet… perhaps they found a way to exploit the Tether website to *issue* free Tethers?

Pure speculation, but wow. 😵https://t.co/7ddiyjoTsD

— Jackson Palmer (@ummjackson) November 21, 2017

So, in other words, the attacker used TWO multi-sig wallets to transfer funds. Both the “treasury wallet” and the “intermediary” wallet were multi-sig ones, which means higher security. But “higher security” is a bit of a stretch for a company that gets hacked twice in two years.

…because what makes EVERYONE suspicious is the essence of the hack: hardly any hacker in their right mind would steal questionable, illiquid tokens that are about to be in the center of a scandal. Tether is not BTC, and tethers are not US dollars. It’s extremely painful to launder or withdraw stolen tether. Who on earth would do that?

#Tether decides to cover up their BS operation by saying tokens were stolen… They forgot no one needs their tokens, a hacker would be after USD or cryptocurrencies. @Bitfinexed was right all the way.

— D Pike (@coinvigilance) November 21, 2017

This article will be UPDATED with the latest developments on the story.

UPD1: There is evidence that the same person who hacked Bitstamp in 2015 performed the Tether attack in 2017: Reddit investigation.

1 Comment
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