Blockstream Refuses Ransom in Liquid Network Bitcoin Theft
Blockstream Demands Bitcoin Return After Liquid Hack
Bitcoin infrastructure firm Blockstream has publicly refused to pay a ransom to hackers who exploited its Liquid sidechain to steal over 4,000 bitcoins. The company is urging the hackers to return the remaining stolen funds.
The hackers withdrew about 4,000 bitcoins from the federation wallet backing Liquid, a sidechain for fast bitcoin transactions. After negotiations, they returned most of the funds but kept 598.5 bitcoins worth over $46 million as ransom.
Key Details of the Incident
- Hackers stole approximately 4,000 bitcoins by exploiting an inflation bug on the Liquid sidechain.
- Blockstream confirmed it will not pay a ransom and will work with law enforcement to trace and recover the assets.
- The hackers communicated with Blockstream via messages written into Bitcoin blocks, threatening to reveal encrypted messages if their demands were not met.
Blockstream's Official Statement
Blockstream stated on X that taking assets without authorization is a crime, not responsible disclosure. The company emphasized it will not pay for the return of stolen property and will abandon users. It plans to collaborate with law enforcement, exchanges, and forensic specialists to identify those responsible.
Confirmed Facts From the Sources
The hack occurred on the Liquid network, a layer-2 sidechain created by Blockstream for quick asset transfers. The hackers used an inflation bug to create over 4,000 LBTC tokens (backed 1:1 with bitcoin) and cashed them out for real bitcoins. Blockstream's refusal to pay a ransom is documented in its public post.
Why This Matters for Crypto Security
This incident highlights security risks in sidechains and the challenges of dealing with ransomware demands in cryptocurrency. It underscores the importance of bug fixes and the debate around white-hat hacking claims, as Blockstream labeled the hackers' actions as theft.
Next Steps Involving Law Enforcement
Blockstream has announced it will work with law enforcement, exchanges, service providers, and forensic specialists to trace and recover the stolen assets and identify those responsible.
