Liquid Recovers 3,400 BTC After On-Chain Negotiations

A coordinated effort by Liquid Network and Blockstream has resulted in the recovery of 3,400 BTC from the actors behind Sunday's near-total drain of its Bitcoin federation reserve.

The recovery is a significant development as it returns about 85% of the funds after negotiations conducted through Bitcoin transactions. The actors had initially withdrawn almost 4,000 BTC on September 6 after unbacked L-BTC entered SideSwap's authorized peg-out path, reducing Liquid's federation reserve from more than 4,200 BTC to roughly 200 BTC.

The return of the 3,400 BTC was confirmed on September 7 at 16:09 UTC. A 'safe to return' message was transmitted by Blockstream, confirming that bridge nodes had been patched. The repayment transaction sent exactly 3,400 BTC back to the Liquid federation address, while approximately 598.5 BTC returned as change to the address controlled by the actors.

The remaining balance represents roughly 15% of the Bitcoin involved in the withdrawal and has not yet been resolved, with negotiations continuing between Liquid Network and the self-described white hats.