Liquid ‘white hats’ return $270M in Bitcoin as network prepares restart
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Purported white-hat hackers withdrew about 4,000 BTC (roughly $320 million) from the Liquid Federation wallet but subsequently returned 3,400 BTC (about $270 million) after Blockstream confirmed patches to the affected bridge nodes. Samson Mow, JAN3 CEO and former Blockstream executive, said approximately 598 BTC remains outstanding and that Blockstream is still engaging with the actors, who claim to be white hats. The Liquid network remains paused as federation members prepare a coordinated restart.
Why it matters
The partial return of Bitcoin restores much of the backing for Liquid-issued L-BTC, which is pegged to Bitcoin held by the federation. This is significant for the network’s planned restart and continued operation. Blockstream’s ability to patch the vulnerability and recover funds reduces the impact on users and the sidechain’s credibility. The source does not elaborate further on broader industry impacts.
Key context
The withdrawal was executed via SideSwap’s Peg-out Authorization Key, though neither Liquid nor SideSwap consider the key compromised. Instead, a bug in Elements, the underlying open-source software for Liquid, was responsible. Blockstream negotiated directly with the actors through signed Bitcoin transactions, leading to the partial return. SideSwap and Liquid have not publicly addressed repayment terms or classified the outstanding amount as a bounty.
Key numbers and entities
Key entities include Blockstream, Liquid Federation, SideSwap, JAN3 CEO Samson Mow, and Ledger CTO Charles Guillemet. Approximately 4,000 BTC were initially withdrawn, 3,400 BTC returned, leaving about 598 BTC outstanding. The returned Bitcoin is valued at around $270 million based on the source's figures.
What remains unclear
The source does not clarify the exact motives of the actors or the terms behind the partial retention of 598 BTC. Neither Blockstream nor Liquid publicly confirmed if this amount constitutes a bounty or ransom. The timeline for Liquid’s restart beyond preparations is unspecified. Cointelegraph did not receive comment from Blockstream or Liquid before publication.