The whitehat hackers behind Sunday’s Liquid Network breach have largely kept their promise, returning most of the stolen bitcoin after the network moved to fix the vulnerability.
The as-yet unidentified group has returned 3,400 of the 4,000 BTC they drained on Sunday, and about 598 BTC, worth roughly $47 million, is still outstanding, according to information shared by Liquid’s Samson Mow.
Liquid Network, a Bitcoin sidechain built by Blockstream, was hit on Sunday when attackers withdrew 4,000 BTC, worth $320 million, from the federation wallet that backs its token, L-BTC. The network is designed as a faster, more private settlement layer on top of Bitcoin.
It is supported and maintained by a group of major crypto companies, such as exchanges and miners, and every L-BTC is supposed to be matched one-for-one with real bitcoin locked in a shared wallet.
Sunday’s hack drained almost entire reserve stash of around 4,200 BTC, leaving just 197 BTC in the federation wallet. In other words, L-BTC was suddenly far from fully backed.
Operators immediately disabled bridge nodes, paused the network, and told exchanges to freeze L-BTC deposits and withdrawals. Other assets issued on Liquid, including tether, were not affected.
Samson Mow, a prominent Bitcoin advocate and former chief strategy officer at Blockstream, who has been posting official-style updates on the incident, said Monday that Blockstream is still talking with the hacker group.
“Approximately 598 BTC remains outstanding, and Blockstream continues to engage with the white-hat hackers,” he wrote. “The network remains paused while Blockstream and Federation members make additional fixes and security improvements, resolve the chain split, and prepare for a safe restart.”
The group negotiated in public by writing messages into Bitcoin transactions. After Blockstream said the affected bridge nodes had been patched, they sent 3,400 BTC back to the federation wallet and kept the rest.
The return eases the immediate collateral crisis, but Liquid is not finished.
Operators still have to finish security work, unwind a chain split created during the pause, and restore confidence that L-BTC is fully backed before they flip the switch again.
“No user action is needed, and please do not send Bitcoin to Liquid peg-in addresses until we confirm the network has restarted,” Mow said.
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