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Tether refuses to pay $24m ransom

Kirsten Doyle
By Kirsten Doyle, ITWeb contributor.
Johannesburg, 02 Mar 2021

Blockchain and crypto-currency organistion Tether has received a ransom note in which bad actors are allegedly demanding 500 bitcoin ($24 million).

The company tweeted: “Today we also received a ransom demand for 500 BTC to be sent to bc1qa9f60pved3w3w0p7snpxlnh5t4uj95vxn797a7. The sender said that, unless they receive the BTC by tomorrow, they will leak documents to the public in an effort to 'harm the bitcoin ecosystem.' We are not paying.”

The company added that it is not clear whether this is a basic extortion scheme such as those directed at other crypto companies or individuals aiming to undermine Tether and the crypto community as a whole. "Either way, those seeking to harm Tether are getting increasingly desperate."

In the same thread, the firm said that documents circling online that claim to show an interaction between Tether personnel and representatives of Deltec Bank are bogus.

A ‘sad’ attempt at a shakedown

Paolo Ardoino, CTO of Tether and Bitfinex, claimed the main goal of these alleged leaks is to discredit bitcoin and other crypto-currency.

"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.”

“Under the circumstances, it would be reasonable to negotiate with the hackers, while urgently performing an internal investigation,” comments Ilia Kolochenko, founder and CEO of ImmuniWeb. “It might be a good idea to run the forensic investigation under the direction of an external law firm, as this may later preclude discovery of the investigation report in court proceedings, if such are initiated by victims of the alleged breach."

Without understanding the scope and the impact of the alleged breach, it is impossible to make sound decisions whether to pay or not to pay.

Ilia Kolochenko, ImmuniWeb.

He adds that although the FBI and other law enforcement agencies urge victims to not pay the ransom, there is no one-size-fits-all approach, and every detail must be taken into consideration.

“Without understanding the scope and the impact of the alleged breach, it is impossible to make sound decisions whether to pay or not to pay. Sometimes, paying may be the only solution to protect the company and its clients,” he says.

However, there is no guarantee that attackers will honour their promises or stop the extortion. Finally, legal risks, such as unwitting violation of sanctions while paying the ransom, as alerted by the US Department of the Treasury in October, should be evaluated with an in-house counsel or external law firm, he says.

In hot water

This attempt at extortion came hot on the heels of the conclusion of Tether’s long-running feud with the Office of the Attorney General of New York. The company finally reached an $18.5 million settlement in the case in which both Tether and Bitfinex were accused of covering up an $850 million loss.

New York attorney-general Letitia James accused both entities of "recklessly and unlawfully covered up massive financial losses to keep their scheme going and protect their bottom lines.”

She also said Tether's claims that its virtual currency was fully backed by US dollars at all times was a fabrication.

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