Liquid Network Hacked: White Hats Return 3,400 BTC, Keep $47 Million Finder's Fee
The Liquid Network, a Bitcoin sidechain operated by Blockstream, was hacked on Sunday when an attacker withdrew around 4,000 BTC from its federation wallet. However, in a remarkable turn of events, the group, which described itself as 'white hats', returned 3,400 BTC to the network on Monday, leaving behind only $47 million worth of Bitcoin, or approximately 15% of the original amount.
The attackers initially contacted Blockstream through messages written directly into Bitcoin blocks, setting out their condition: that a bug in Elements, the software Liquid is built on, be fixed first. Blockstream confirmed hours later that 'bridge nodes are patched, safe to return the funds,' and the 3,400 BTC was transferred back to the federation's peg address.
However, it appears that an attempt to renegotiate the size of the finder's fee that went nowhere, with a sequence of encrypted messages from Blockstream followed by a sad face emoji written into the blockchain. The contents of these messages are unknown, and Blockstream has remained silent on them so far.