Liquid Hackers Return Massive Bitcoin Haul, Keep Millions as Network Remains Frozen
The Liquid Network has seen a significant turn of events as self-described white-hat hackers returned 3,400 BTC worth about $268 million to the network's reserves. However, they retained 598.5 BTC valued at $47 million.
This comes after an incident that began on September 6 when roughly 4,000 BTC left the Liquid Federation wallet backing L-BTC, representing around 95% of the reserve. The hackers communicated publicly through Bitcoin OP_RETURN messages, first declaring 'we are whitehats. contact us on chain.'
The problem was traced back to an Elements bug that allowed the actors to create unbacked L-BTC, which were later exchanged for real bitcoin from Liquid's reserves. Blockstream eventually responded with PGP-signed messages, and the hackers said they would return the funds after the network was patched.
Liquid itself has cautiously called them 'purported white-hat hackers,' and Ledger CTO Charles Guillemet questioned their approach, although he later acknowledged the actors could be inexperienced researchers. The network remains paused as operators work to restore 1:1 L-BTC backing and distribute a patched Elements release across the network.