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Tether accidentally mints then burns $5 billion USDT tokens

Image Credit: www.coinjournal.com

Wed, 17 Jul 2019, 11:52 am UTC

Stablecoin issuer Tether mistakenly minted and subsequently burned $5 billion worth of its USDT tokens, according to a tweet by Whale Alert.

The Twitter account dedicated to reporting major cryptocurrency transactions detected a transfer of 50 million USDT tokens from cryptocurrency exchange Poloniex to the Tether Treasury through the Omni protocol on the Bitcoin blockchain. It then reported that the Tether Treasury minted 5 billion USDT tokens on the Tron blockchain but were eventually burned.

After which, Tether minted another 50 million USDT on the same chain and then burned another 4.5 billion USDT. Finally, it transferred 50 million Tron-based USDT to a wallet assumed to be owned by Poloniex.

According to Tether CTO Paolo Ardoino, the accident happened when the company was helping cryptocurrency exchange Poloniex to perform a chain swap of 50 million Omni-based USDT tokens to the Tron blockchain.

Tether is issued on multiple chains (Omni, ETH, ..) When @bitfinex receives too many deposits for Tether-Omni and then users want to withdraw Tether-ETH, @bitfinex sends back to @Tether_to the Omni ones and gets back the same amount in ETH,” Ardoino explained in a tweet.

In a separate post, he pointed out that the error occurred following an “issue with the token decimals.” He also provided links to the burned $4.5 billion USDT and 500 million USDT worth of transactions.

Meanwhile, Poloniex also came to Ardoino’s rescue and confirmed that the mistake indeed happened while the Circle-backed firm was conducting USDT chain swap with the help of Tether.

An incorrect amount of USDT was accidentally minted, and this has since been resolved to the intended value,” the company tweeted.

Justin Sun, Tron CEO and Founder, also confirmed that 50 million USDT tokens was eventually transferred from Omni to Tron, proving receipts of the said transactions.

Meanwhile, Ardonio has also assured it is working on ways to prevent such incident from happening again. This is also to shut down conspiracy theories circulating across the internet, alleging that the act was done intentionally.

Unfortunately we have to play with different toolchains across multiple [blockchains] and sometimes issues happen. When working anyway to prevent this from happening in the future.

The latest news brings Tether once again into the spotlight after the New York Attorney General’s Office (NYAG) revealed that Tether and crypto exchange Bitfinex continued providing their services to New Yorkers as late as 2019, a contradiction to their earlier claim that they have ceased its operations since 2015. It can be recalled that this legal battle started when NYAG accused Bitfinex of illegally conniving with Tether to cover up an $850 million loss.

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