Liquid Hackers Refuse to Budge Until Vulnerability is Patched

The Liquid Network security incident saw approximately $320 million worth of funds withdrawn from the federation wallet on Sunday. The hackers, who claim to be white-hats, withdrew nearly 4,000 BTC, accounting for around 95% of the Bitcoin pegged into the sidechain.

Liquid subsequently disabled its bridge nodes and paused the network in response. The hackers then consolidated the funds into a Bitcoin address alongside a message declaring: 'we are whitehats. contact us on chain.'

A makeshift communication channel was established between the hackers and Blockstream through Bitcoin OP_RETURN messages as well as PGP-encrypted text.

The hackers have pledged to return 'most' of the stolen funds, but their exact intentions remain unclear. They are demanding that the vulnerability be fixed across the network before they will release any of the funds.