On 12th September 2020, Tether CTO, Paolo Ardoino, announced on Twitter that Tether retrieved 1 million USDT to a user. The money loss was after the user mistakenly sent the coins to the wrong DeFi address and thought it was impossible to get the money back.
Information on the Tether user losing his money emerged on 8th September 2020, on Twitter. The user’s Twitter account was Obama, an anonymous user, who proved to be a group of traders from China. Here is how the user sent his money to the wrong DeFi address.
User Sends 1 Million USDT to the Wrong DeFi Address
A Chinese cryptocurrency investor planned to use his 1 million USDT to offer yield farming. He, therefore, chose a platform known as Swerve, which split from Uniswap via Fork. The trader sent his 1 million USDT to the Swerve network, but something went wrong during the transaction.
The cryptocurrency investor mistakenly sent money to Swerve’s smart contract. Instead, he was to transfer the assets to the liquidity pool on Swerve’s platform before yield-farming. In turn, the trader lost his 1 million USDT from the transaction.
Apparently, in DeFi transactions, there is no intervention possible to user’s accounts or transactions. Fortunately, centralized finance applications, such as Tether, can control user’s crypto in some way. CeFi platforms can freeze one’s account when performing illegal operations, or recover your assets if you lose them.
Tether Steps in to Recover the Funds
The Tether CTO, Paolo Ardoino, eventually came to the trader’s aid, who lost his 1 million USDT. It was after Paolo got information about how the user lost his USDT, that he intervened. Ardoino reached out to the owner of the funds on 8th September, the day of the incident, requesting him to open a support ticket at the Tether support center. The Tether CTO said it was possible to return the money lost since the transaction was composed of USDT.
The Tether team investigated the cryptocurrency investor’s transaction, realizing it was ERC-20 tokens, stuck at an address. Blockstream CSO, Samson Mow, presumed that the trader burnt the lost 1 million USDT. Later, he gave proof to Tether, and the CeFi platform finally returned the money to the owner.
However, Paolo warned that it would be impossible to burn USDT on a particular address on the liquid network. The Tether CTO urged crypto users, especially yield-farmers, to be cautious when using DeFi tools. He also encouraged yield-farmers to use USDT, so that if a transaction goes wrong, they can get their money back.