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Tether accidentally issues $5bn worth of USDT, claims it was an issue with decimals

Tether accidentally issues $5bn worth of USDT, claims it was an issue with decimals
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This post was last updated on November 7th, 2019 at 02:31 am

Tether, the issuer of the USDT accidentally issued $5 billion worth of its own stablecoin while Poloniex was conducting a USDT chain swap from Omni to Tron. The CTO of Bitfinex and Tether said there had been an issue with the “token decimals,” after which the company burned the entire 5 billion supply.

Tether makes a $5 billion mistake

In what could be the most expensive typo ever made, Tether mistakenly issued and subsequently burned 5 billion USDT coins. The mistake was first spotted by Whale Alert on July 13, a Twitter account dedicated to reporting major crypto transactions.

The tweet initially caused a massive stir in the crypto community, leaving many traders in disbelief over how the company managed to mint $5 billion worth of cryptocurrency.

However, Tether reacted quickly and burned the entire supply within minutes. Paolo Ardoino, the chief technical officer at Tether and Bitfinex, responded to Whale Alert’s tweet, owning up to the mistake. Ardoino said that there had been an issue with the “token decimals,” as the company was trying to move 50 million from Bitcoin’s Omni blockchain to Tron.

Justin Sun, the founder and CEO of Tron, confirmed that 50 million USDT was eventually transferred from Omni to Tron, providing the list of all token transfers to Tron.

The crypto community is not happy with Tether

After the dust from the incident had settled, a few theories about how and why did Tether make such a disastrous mistake came up. On July 14, the Tether Treasury burned 4.5 billion USDT, which could mean that Tether’s original intention was to create 500 million USDT.

While this sounds like a reasonable explanation on how the company accidentally turned 500 into 5000 million, it left the question of how was it able to create 500 million USDT in the first place. Tether hasn’t been a stranger to controversy, as doubts about its ability to back all of the USDT in circulation with fiat currency have been increasing in the past couple of years.

Conspiracy theories about whether this was an intentional act to manipulate the price of Bitcoin were quickly shot down by Ardoino himself, who said that mistakes like these can actually happen. Ardoino claimed the company was dealing with different toolchains across multiple blockchains, allowing a mistake like this to slip through.

It’s hard to say whether Tether’s accidental $5 billion inflation had anything to do with Bitcoin‘s sudden drop in the past couple of days, as it often causes significant fluctuations in its price. USDT briefly lost its dollar peg after the news about the accidental mint gained traction, but managed to recover within hours.

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