Tether Freezes $1.7M in USDT Stolen in Yearn Finance Exploit

Following the recent attack on the Yearn.Finance protocol, major U.S. dollar stablecoin company Tether froze $1.7 million worth of USDT stolen from the platform. Meanwhile, Bitfinex disclosed that it had made the last loan repayment to Tether.

Tether Freeze Raises Centralization Concerns

Tether CTO Paolo Ardoino announced the news of the USDT freeze via his Twitter handle on Friday (Feb. 5, 2021). The company’s action would subsequently prevent the hacker from spending the stolen funds.

. @Tether_to just froze 1.7M USDt stolen as part of the hack of Yearn DAI v1 vault.
More info here https://t.co/MjGScEucQB

— Paolo Ardoino (@paoloardoino) February 5, 2021

The news of the attack was first reported by the decentralized finance (DeFi) protocol via Twitter on February 4, which revealed that Yearn’s v1 DAI vault suffered an exploit.

In a vulnerability disclosure published afterward, the team was able to mitigate the attack under 11 minutes, thereby saving 24 million DAI out of the 35 million DAI in the vault, with $11 drained from the vault. The rogue actor also managed to profit $2.7 million from the flash loan attack.

However, Tether’s decision to freeze the stolen funds attracted a series of criticisms from members of the crypto community on Twitter. Some of the comments noted that Tether’s action went against the tenets of decentralization. Others stated that the company was ruining its reputation, with claims that the USDT company was more centralized.

Ardoino meanwhile responded to the criticisms, saying:

“I want to use this occasion to remind everyone that Tether $USDt is a centralized stablecoin using blockchains as a transport layer. Among Tether duties there is the responsibility of acting and collaborating with LE and regulators regarding potential dangerous behavior.”

Meanwhile, this is not the first time that Tether is freezing USDT funds following an attack on a crypto platform. Following a hack on Singapore-based exchange KuCoin which reportedly cost the exchange $280 million, the company froze $33 million worth of crypto.

Bitfinex Makes Final Loan Repayment of $550M to Tether

In other Tether-related news, cryptocurrency exchange Bitfinex revealed that it had paid Tether the remaining loan balance of $550 million. According to an official announcement, the crypto exchange made the payment entirely in fiat currency.

Back in 2019, the office of the New York Attorney General (NYAG) accused Bitfinex of using over $700 million from Tether’s reserves to cover up a loss of $850 million. The crypto exchange, in its defense, stated that the $850 million was sent to the payment processor, Crypto Capital Corp, with Bitfinex adding that the funds were seized and safeguarded.

Although the case is still ongoing, Bitfinex, in today’s announcement, said that the loan was paid earlier than scheduled, adding that the line of credit was now closed.