The Biggest Hacks and Scandals Involving USDT

​Tether (USDT), the world’s most traded stablecoin, has been pivotal in the cryptocurrency ecosystem since its inception in 2014. Designed to maintain a 1:1 peg with the U.S. dollar, USDT facilitates seamless trading between cryptocurrencies without the volatility typically associated with digital assets. However, its prominence has also made it a focal point for various hacks and scandals over the years. This article delves into some of the most significant incidents involving USDT, highlighting the challenges and controversies that have surrounded this stablecoin.​Investopedia+1The Guardian+1

1. The 2017 $30 Million Hack

In November 2017, Tether reported a security breach resulting in the loss of $30 million worth of USDT. According to the company’s official announcement, an external attacker managed to withdraw 30,950,010 USDT from Tether’s treasury wallet to an unauthorized Bitcoin address. In response, Tether suspended its wallet services and initiated a hard fork of the Omni Layer protocol to prevent the stolen funds from entering the broader cryptocurrency ecosystem. The company also urged exchanges and wallet providers to update their software to prevent the stolen tokens from being transacted. ​Cointelegraph

2. The 2020 $300,000 Theft Due to Compromised Wallet Keys

In 2020, a USDT holder reported the theft of over 300,000 USDT. The victim had stored their wallet’s private keys in an Evernote account, which was compromised by hackers. The attackers accessed the private keys and transferred the USDT to their own addresses. Upon discovering the breach, the victim reported the incident to Tether and law enforcement agencies. Tether responded by freezing the stolen funds, preventing the hackers from moving them further. This incident underscored the critical importance of secure private key storage and the potential risks of storing sensitive information on cloud-based platforms. ​CoinDeskFinancial TimesAMBCrypto

3. The 2023 Zero-Transfer Phishing Scam

In August 2023, a sophisticated phishing scam resulted in the theft of 20 million USDT. The attacker employed a “zero-transfer” technique, where they sent a transaction of 0 USDT from the victim’s wallet to a phishing address that closely resembled the intended recipient’s address. This tactic exploited the common practice of users verifying wallet addresses by checking only the first and last few characters. Believing the phishing address to be legitimate, the victim subsequently transferred 20 million USDT to the attacker’s wallet. Tether acted swiftly by blacklisting the compromised address, effectively freezing the stolen funds and preventing the attacker from accessing them. ​AMBCrypto+1Bitcoinist.com+1Bitcoinist.com+1AMBCrypto+1

4. The 2023 Yearn.Finance Exploit

In April 2023, an outdated contract from Yearn.Finance, a decentralized finance (DeFi) protocol, was exploited, leading to the minting of an astronomical 1 quadrillion yUSDT (Yearn Tether). The attacker swapped these yUSDT tokens for various stablecoins, securing approximately $11.6 million in the process. The exploit targeted the iearn contract, which had been deprecated since 2020. Yearn.Finance clarified that the issue was isolated to this outdated contract and did not affect their current systems. This incident highlighted the vulnerabilities associated with legacy contracts in the rapidly evolving DeFi space. ​Cointelegraph

5. Tether’s Alleged Use in Illicit Activities

Beyond direct hacks, Tether has faced scrutiny over its alleged use in facilitating illicit activities. A report from Investopedia highlighted that Tether’s liquidity, relative anonymity, and ease of cross-border transactions have made it a preferred choice for international criminals. The report estimated that approximately $17 billion in illegal trades, including transactions by drug cartels and terrorist organizations, were conducted using Tether. This has attracted attention from U.S. and EU law enforcement agencies, raising concerns about the potential systemic risks posed by the widespread adoption of Tether. ​CointelegraphInvestopedia+1Financial Times+1

6. Political Connections and Conflict of Interest Concerns

In early 2025, Howard Lutnick, CEO of Cantor Fitzgerald, was nominated for the position of U.S. Secretary of Commerce. Lutnick’s firm holds a 5% stake in Tether, raising concerns about potential conflicts of interest. Given the Commerce Department’s role in shaping cryptocurrency policy, senators expressed apprehension that Lutnick’s financial interests in Tether could influence regulatory decisions. Critics argued that his involvement with Tether, especially considering the stablecoin’s alleged links to illicit activities, could pose challenges to impartial policy-making. ​Investopedia+2The Guardian+2Financial Times+2Investopedia

7. The Russian Crypto Laundering Network

In late 2024, authorities from the U.S., UK, Ireland, and France uncovered a sophisticated crypto money-laundering network allegedly led by Russian socialite Ekaterina Zhdanova. The network, known as the Smart Group, reportedly facilitated the movement of billions of dollars for Russian oligarchs and cybercriminal groups through cryptocurrencies, including Tether. The operation involved swapping cryptocurrencies for cash with criminal organizations across Europe, complicating efforts to trace the origins of the funds. This case shed light on the challenges law enforcement faces in tracking illicit financial flows within the crypto ecosystem. ​WIRED

8. Southeast Asian Crypto Scam Centers

Investigations in early 2025 revealed the operations of crypto scam centers in Southeast Asia, managed by criminal networks originating from China. These centers employed victims of human trafficking, who were coerced into conducting cryptocurrency scams under inhumane conditions. The scams targeted individuals worldwide, deceiving them into investing their savings into fraudulent crypto schemes, often involving Tether. The revelations highlighted the darker side of the crypto industry, where vulnerable individuals are exploited both as victims and as unwilling perpetrators of scams. ​El País

**9. The 2023 Zero-Transfer Phishing