Tether Froze $300K of Stablecoin Hacked After Victims Left Wallet Keys in Evernote

Monday 26 October 2020, 8:00 PM AEST - 1 month ago


The U.S. government is pursuing a civil forfeiture claim on more than 300,000 units of the tether (USDT) cryptocurrency after they were reported stolen in a hack earlier this year.

The funds, co-owned by Shixuan Cai and business partner Lin Jian Chen, were later frozen by operator Tether Ltd. after Cai reported the theft to the Los Angeles Police Department (LAPD) in April, court documents filed on Thursday show.

Now the U.S. government wants to finalize the legal seizure of those assets, saying they are in violation of section 1030 of the Civil Forfeiture code, for fraud and related activity in connection with computers.

Back in February, Cai purchased 300,900 USDT – a stablecoin linked to the price of the U.S. dollar – through the cryptocurrency exchange Binance. Cai then transferred those funds to a personal wallet co-owned and managed with Chen.

Just four minutes after Cai had transferred the tether from Binance to the personal wallet, the funds were transferred again, but without the business pairs permission, to a wallet address ending in 8869.

Hours later the funds were split with two thirds (200,600 USDT) of the funds going to yet another wallet address ending in 44c2, while 100,301 USDT remained in the 8869 wallet.

Cai contacted Chen the following day attempting to uncover how the funds had been moved, learning Chen had recorded their private key, used for authorizing transfers from their wallet, in an Evernote account.

Evernote is a note taking and task management application that stores information on the cloud and is accessible across multiple devices owned by an individual, or individuals if shared.

Hackers masking their IP address through a virtual private network (VPN) found the wallet key in Evernote and conducted multiple intrusions between Jan. 26 and Feb. 5, Chen later learned.

The key was used to authorize the transaction from their personal wallet to the destination wallet ending in 8869. Cai reported the the ...

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