“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.
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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.