Tether is said to have received a ransom note demanding 500 bitcoins.

[Cordillerabit]

Tether (-0.03 percent ), the stablecoin's issuer, claims to have received a ransom note demanding 500 bitcoin (BTC, +4.97 percent ) (currently worth about USD $22 million) lest documents that could "harm the bitcoin ecosystem" be made public. In a tweet on Sunday, Tether revealed the alleged extortion attempt.

“We take this seriously, even though we believe it is a pretty sad attempt at a shakedown. We informed law enforcement about the forged communications and the associated ransom demand. Tether tweeted, "As always, we will fully support law enforcement in an investigation of this extortion scheme."

Tether plays an important, albeit occasionally contentious, role in the cryptocurrency market. Its USDT token, which is pegged to the US dollar, is widely used by traders, exchanges, and the crypto economy as a whole, earning it what some refer to as "systemic importance."

Tether's market cap has risen from $2 billion to over $34 billion in the last year, coinciding with the meteoric rise in bitcoin's price. Tether claims that every USDT issued is backed by dollars or dollar-equivalents in a bank account, a claim that has sparked debate among academics, crypto-skeptics, and the New York Attorney General (NYAG).

Documents purportedly showing an email thread between a Tether employee and representatives for Deltec, the Bahamian bank said to hold USDT reserves, have circulated online in recent days, reigniting questions about tether's backing.

The emails haven't been double-checked. In the same Twitter thread announcing the extortion attempt, Tether denied their legitimacy. By the time of publication, a company representative had not responded to a request for comment.

Tether reached an agreement with the New York Attorney General on Tuesday to end a multi-year investigation into a $850 million loan made to its sister exchange Bitfinex. As part of the settlement, the companies did not admit to any wrongdoing.

“Tether's claims that its virtual currency was fully backed by US dollars at all times was a lie,” Attorney General Leticia James said. Tether will provide quarterly reports on its reserves for the next two years as part of the agreement.

Source: Bityard