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$31 million stolen from cryptocurrency start-up Tether

A hacker has apparently stolen almost $31 million from a start-up company that offers dollar-backed digital tokens.

Tether operates a cryptocurrency asset called USDT, which it backs via the US dollar. About $30.95 million was stolen on the 19th November, it said in a now-removed post. The company confirmed that it will not redeem any of the stolen tokens, and is in the process of attempting recovery and preventing them from entering the general market.

To do so, Tether is temporarily freezing its back-end wallet service as well as rolling out an update to its partner software, Omni Core, which will essentially lock the tokens inside the alleged hacker’s wallet.

One of Tether’s partners is the secretive crypto exchange Bitfinex, which is said to share owners with the start-up. Rumours allege that the two companies have leant on each other to manipulate the market before, and there are suggestions that the hack was an inside job – although all of this is merely hearsay at this point.

Ilia Kolochenko, CEO of web security company High-Tech Bridge, said:

“High profits are unavoidably accompanied by high risks and dangerous pitfalls. Omitting fundamental questions of cryptocurrency reliability, many startups with great ideas significantly underestimate and ignore their own cybersecurity imperiling their business. We will likely see more disastrous breaches where many inexperienced investors into ‘digital gold’ will lose their savings.

“Every investor should properly enumerate and assess the risks related to a particular technology and especially to a cryptocurrency. If you don’t know how quickly you can exit back to cash, how the currency can be regulated, manipulated or impacted by a hack – you’d better find another digital asset to invest into, such as intellectual property.”

Tether, which did not explain how the hack was performed, claims that because its tokens are tied to real-world currency, they avoid the volatility seen in other cryptocurrency markets.

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