Bitcoin falls after $31 million theft of cryptocurrency Tether

"Bitcoin is built on an amazing technology. There's a limited supply of it, people are trusting it," he said. "Remember, this whole revolution came out of a breakdown in trust, it came out of the '08 financial crisis where people say, 'We no longer trust financial institutions, we no longer trust governments.'"

Bitcoin fell the most in a week after the company behind cryptocurrency tether reported a $31m theft.

The amount was taken from the Tether Treasury wallet on 19 November and sent to an unauthorized bitcoin address, according to an announcement on the company’s website posted on Tuesday. The stolen tokens will not be redeemed, and the company is trying to prevent them from entering the ecosystem, it added. Bitcoin dropped as much as 5.4%, the most since 13 November. It was last trading 1.6% weaker at $8,117.

Tether, with a market capitalization of $673m, is the world’s 19th most-valuable virtual currency, according to data on Coinmarketcap.com. The tokens are pegged to fiat currencies, allowing users to store and transfer globally and instantly, according to the website. One tether is equal to a dollar.

The incident is the latest in a long list of hacks that have dented confidence in the security of cryptocurrencies. Such events typically have fleeting market impact: bitcoin has surged to one record after another during the past few years despite major thefts from exchanges including Bitfinex and Mt. Gox.

The company behind the controversial Tether altcoin has revealed a few hours ago that it suffered a cyber attack in which the alleged hacker made off with over $30 million worth of USDT. The company also announced some steps to rectify the situation, including one that is effectively a temporary hard fork, leading exchanges to suspend USDT transactions.

The company lists its next steps to deal with the matter and calls on Tether integrators to support its actions to prevent further ecosystem disruption. These include temporarily suspending the tether.to back-end wallet service, opening an investigation to find the cause of the attack to prevent similar actions in the future and do an emergency hard fork.

The team explains that they are providing new builds of Omni Core, the software used by Tether integrators to support transactions, that should prevent any movement of the stolen coins from the attacker’s address. This will cause a consensus change to currently running clients, “meaning that it is effectively a temporary hard fork.”