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Tether Allegedly Received Ransom Note Demanding 500 BTC

“While we believe this is a pretty sad attempt at a shakedown, we take it seriously," the company tweeted.

Feb 28, 2021 at 7:54 p.m. UTC
Updated Sep 14, 2021 at 12:18 p.m. UTC

Tether, the issuer of the USDT stablecoin, claims to have received a ransom note asking for 500 bitcoin (currently worth about USD $22 million), lest documents be made public that could “harm the Bitcoin ecosystem.” Tether disclosed the alleged extortion attempt in a tweet Sunday. 

“While we believe this is a pretty sad attempt at a shakedown, we take it seriously. We have reported the forged communications and the associated ransom demand to law enforcement. As always, we will fully support law enforcement in an investigation of this extortion scheme,” Tether tweeted.

Tether serves an important, though sometimes controversial, role in the cryptocurrency market. Its USDT token, pegged to the U.S. dollar, is used by traders, exchanges and throughout the crypto economy, giving it what some call systemic importance. 

In the past year, coinciding with the meteoric rise in the price of bitcoin, Tether’s market cap exploded to over $34 billion from $2 billion. Tether has claimed that every USDT issued is backed by dollars or dollar-equivalents held in a bank account, which has become a point of contention among academics, crypto skeptics and the New York Attorney General (NYAG). 

In recent days, documents have circulated online, purportedly showing an email thread between a Tether employee and representatives for Deltec, a bank in the Bahamas said to hold USDT reserves, that reignite questions about Tether’s backing.

The emails have not been verified. Tether denied their legitimacy in the same Twitter thread announcing the extortion attempt. A company representative didn't respond to a request for comment by press time.

On Tuesday, Tether settled with the NYAG regarding a multiyear investigation regarding an $850 million loan made to its sister exchange, Bitfinex. The firms did not admit wrongdoing as part of the settlement. 

Attorney General Leticia James said, however, “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.” Under terms of the agreement, Tether will provide quarterly reports on its reserves for the next two years.

DISCLOSURE

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