On Sunday, November 19th, $30,950,010.00 in Tether tokens were stolen from our treasury wallet through malicious action by an external attacker. While we are in the process of co-ordinating and co-operating with law enforcement on this matter, we are satisfied that we have found the cause of the breach of Tether’s systems. We are taking measures to recover the Tethers and are migrating the platform to a new infrastructure. More information about our initial response to this breach is here.
No customer funds were stolen as a part of this security breach; only Tether tokens were taken, and only from the Tether hot wallet. We have told Tether integrators that those Tethers will not be redeemed by Tether. This breach was planned and premeditated as a market disruption event and an attack on our customers, our business, and our community.
Those of us who care about our community must fight against hackers as well as those enemies using misinformation to create chaos and sow distrust.
We are a privately held corporation with significant assets. Our books are currently under audit by Friedman LLP, one of the fifty largest accounting firms in the United States. While the audit is taking longer than we would have liked, the reality is that the interim consulting memorandum they produced shows clearly that Tether has the resources to back Tethers that have been issued. Friedman looked at our bank statements and other documents underpinning these issuances.
We have strong customer and shareholder relations and tens of thousands of you know the importance of our community and this journey we are on together. We work closely with financial regulators, law enforcement agencies, compliance personnel, bank officials, and tech academics, among others, to ensure that we are protecting our customers and meeting our obligations.
As with other financial institutions worldwide, and in order to safeguard your assets, we do not redeem Tethers from terrorists or other criminal elements. In order to protect our customers and the community, we must keep language in our terms of service preventing bad elements from sullying our systems. In any event, our terms of service inform our customers of what the law already provides: that we cannot and will not issue Tethers to or redeem Tethers from criminal elements. Nevertheless, we believe in being as straightforward and honest as possible about what you are dealing in. We are willing to review our terms of service to see if we can make this point more clearly.
Similarly, we will not endanger our customers by revealing our banks. As those of you who are active in cryptocurrency know, there is pressure from large correspondent banks in the U.S. to bully other institutions not to accept the community’s business. We do, however, bank at major financial institutions and will continue to do so.
Tethers are being ‘printed’ or issued because there is demand for them. This process is explained in the Tether whitepaper. When Tethers are issued, assets are debited (added) to the assets on Tether’s balance sheet, and Tethers are credited (added) to the business’s liabilities. The consulting memorandum demonstrates that these mechanisms are in balance. Every Tether is fully backed by the fiat underpinning it upon issuance.
We are proud to have been one of the first to market with a product. Some of the main actors in the digital token space have adopted it. We believe it works well.
We are proud of the business that we have built, and of its resilience in the face of threats from those trying to attack our community. We always have room for improvement, and we will continue to work hard to continue to earn your trust and confidence. We understand trust must always be earned and we will continue to work hard as a business to improve our communications.