Bitcoin Takes a Hit on Tether Hack But Remains Near Record High

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According to most recent reports, the company responsible for the cryptocurrency pegged to the dollar, Tether, has recently suffered a major hijacking on their main wallet.

But the widely followed cryptocurrency fell more than 5 percent overnight, briefly breaking below $8,000, after CoinDesk reported that Tether, a start-up that offers dollar-backed digital tokens, said hackers stole more than $30 million from its investors. Tether described the incident as a "malicious action by an external attacker". The firm, which issues what it calls US dollar-backed tokens with the objective of easing trading on crypto exchanges, says it's trying to prevent the stolen coins from being used.

Tether and Bitfinex, which have worked together since at least 2014, sued Wells Fargo & Co.in April after the bank cut off access to USA dollar wire transfers, which the companies say they relied on to send money back to customers. Tether is also said to have suspended the back-end wallet service for its partners.

New tethers VS bitcoin prices
New tethers VS bitcoin prices

Tether added that the stolen tokens won't be redeemed but will be flagged to prevent the hacker from exchanging them through its service. It also said that issuances of USDT haven't been affected by the attack, maintaining that the Tether reserve still fully backs all USDT. The only tokens that will not be redeemed are the ones that were stolen from Tether treasury yesterday. "Those tokens will be returned to treasury once the Omni Layer protocol enhancements are in place".

Coindesk also reported that Tether had links to Bitfinex - a Hong Kong-based exchange that reported a hack previous year blamed for about $65m of losses - although the report added that the "nature of the connection" was unclear.

"If tether is actually fundamentally compromised, that will be a very big issue for many exchanges", Hayes said. Upon the release of this news Bitcoin saw a sharp drop in price, although in the time since this morning the price has started to climb back up reaching a price of $8143.60 as of the time of writing. All such incidents raise serious questions as to how to combat such online thefts and how vulnerable are several exchanges and platforms which stores huge sums of investor money with them. It's likely to fuel the debate on Wall Street over whether digital coins are secure enough to enter the mainstream of finance.

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