Liquid Network Hackers Return $269M, Depegging Risk Remains High
The Liquid Network, a Bitcoin layer-2 privacy side chain, suffered a major security breach over the weekend, with hackers draining around $320 million (4,000 BTC) from its total reserves. The incident exposed a software vulnerability that allowed the attackers to print unbacked L-BTC tokens and redeem them for real Bitcoin.
The hackers, who claimed to be 'whitehats', returned 85% of the stolen funds, approximately $269.2 million (3,400 BTC), after Blockstream deployed a patch to fix the issue. The remaining $50.8 million (598.5 BTC) is still in their possession.
The network's reliance on a 1:1 backing of Bitcoin to L-BTC creates a significant depegging risk, which could lead to a capital flight and further decrease the value of L-BTC. Blockstream co-founder and CEO Adam Back has yet to comment on the matter.