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Tether hit by an alleged extortion scheme, 500 BTC ransom demanded

  • Tether receives an extortion note demanding a ransom payment of 500 bitcoins.
  • The stablecoin issuer said that it is not going to pay.
  • Tether believes that this “is a pretty sad attempt at a shakedown.”

Tether, the issuer of a stablecoin of the same name, claimed that it received an extortion note accompanied by a ransom demand of 500 BTC ($24 million at the time of writing).

Tether revealed the extortion scheme in a series of tweets in which the perpetrator warned that if the company does not play ball, documents that will “harm the bitcoin ecosystem” will be leaked to the public.

Tether not paying

There are bogus documents circulating online purporting to be between the personnel of Tether and its Bahamas-based bank, Deltec. The documents are fake, says Tether.

The circulating email threads have not been verified.

The company was ordered to pay a ransom of 500 BTC to a given address. Tether is not going to pay.

Tether said it was unsure if this was a basic extortion scheme aimed at the company alone or it’s a bigger scheme targeting the wider cryptocurrency community.

“Either way, those seeking to harm Tether are getting increasingly desperate.”

The stablecoin issuer said it is taking the matter seriously and will work with authorities in an investigation of the scheme.

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 plays an important role in the cryptocurrency sector, although this is overshadowed by the controversy that lingers around the company.

NYAG ends Tether probe

Tether’s market cap meteoric rise at the back of the bitcoin’s price explosion has raised many eyebrows.

USDT, a stablecoin pegged to the U.S. dollar on a 1:1 basis, has seen its market cap grow from $2 billion to $34 billion in a year.

Crypto skeptics and the New York Attorney General (NYAG) contend this and allege that Tether does not have the reserves to back up the growing market cap.

The NYAG recently ended a multi-year probe into Tether’s $850 million-loan to sister company Bitfinex with an $18.5 settlement fee.

As part of the settlement, Tether will spend the next two years providing quarterly reports on its reserves.

Tether fully backed

Despite agreeing to pay the settlement fee, the company has denied any wrongdoing. 

Last month, Deltec said that Tether is fully backed by reserves, squashing fears about the company’s integrity.

“Every tether is backed by a reserve and their reserve is more than what is in circulation,” said Deltec Deputy CEO Gregory Pepin last month.

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