Liquid Network gets back 3,400 bitcoin from white

Liquid Network gets back 3,400 bitcoin from white-hat hackers; talks underway for the rest

The white-hat hackers behind Sunday’s Liquid Network breach have largely kept their promise, returning most of the stolen bitcoin after the network moved to fix the vulnerability.

The white-hat hackers have returned 3,400 of the 4,000 $BTC they drained on Sunday, and about 598 $BTC, worth roughly $47 million, is still outstanding, according to information shared by Liquid’s Samson Mow.

Liquid Network, a Bitcoin sidechain built by Blockstream, was hit on Sunday when attackers withdrew 4,000 $BTC, worth $320 million, from the federation wallet that backs its token, L-$BTC. The network is designed as a faster, more private settlement layer on top of Bitcoin.

It is supported and maintained by a group of major crypto companies, such as exchanges and miners, and every L-$BTC is supposed to be matched one-for-one with real bitcoin locked in a shared wallet.

Sunday’s hack drained almost entire reserve stash of around 4,200 $BTC, leaving just 197 $BTC in the federation wallet. In other words, L-$BTC was suddenly far from fully backed.

Operators immediately disabled bridge nodes, paused the network, and told exchanges to freeze L-$BTC deposits and withdrawals. Other assets issued on Liquid, including tether, were not affected.

Samson Mow, a prominent Bitcoin advocate and former chief strategy officer at Blockstream, who has been posting official-style updates on the incident, said Monday that Blockstream is still talking with the hacker group.

“Approximately 598 $BTC remains outstanding, and Blockstream continues to engage with the white-hat hackers,” he wrote. “The network remains paused while Blockstream and Federation members make additional fixes and security improvements, resolve the chain split, and prepare for a safe restart.”

The actors identified themselves as white-hat hackers and negotiated in public, writing messages into Bitcoin transactions. After Blockstream said the affected bridge nodes had been patched, they sent 3,400 $BTC back to the federation wallet and kept the rest.

The return eases the immediate collateral crisis, but Liquid is not finished. Operators still have to finish security work, unwind a chain split created during the pause, and restore confidence that L-$BTC is fully backed before they flip the switch again.

“No user action is needed, and please do not send Bitcoin to Liquid peg-in addresses until we confirm the network has restarted,” Mow said.

Source: cryptonews.net