Blockstream Refuses to Pay Ransom in Liquid Network Bitcoin Hack

Blockstream Rejects Ransom Demand After Liquid Network Hack

Blockstream, a Bitcoin infrastructure company, has stated it will not pay a ransom to hackers who stole Bitcoin from the Liquid Network, a sidechain built for faster Bitcoin transactions. The hackers are still holding about 598 BTC (Bitcoin) from the incident.

The company described the hackers' actions as "theft" and not "white-hat activity," which refers to ethical hacking practices. This response comes after the hackers demanded a 10% bounty from Blockstream's own funds.

Key Details of the Incident

• On September 6, hackers withdrew approximately 4,000 BTC, then worth around $320 million, from Liquid's federation wallet, a shared digital storage.
• The hackers returned 3,400 BTC after Blockstream patched the affected systems, leaving 598 BTC outstanding.
• Blockstream engaged with the hackers but rejected their demand for a 10% bounty.

Blockstream's Official Position

Blockstream posted on X that "taking assets without authorization and withholding their return is a crime." The company said it worked with the hackers in good faith but will not accept their demands.

If the hackers do not return the Bitcoin voluntarily, Blockstream plans to work with law enforcement, exchanges, and forensic specialists to recover the funds.

Ransom Demand Shared by Industry Figure

The ransom demand was shared in an onchain message by Samson Mow, CEO of Jan3 and former Blockstream chief strategy officer. The hackers warned that Liquid holders could face a 15% loss if the ransom is not paid.

Confirmed Facts from the Report

• Liquid Network paused operations on September 6 after the hack.
• The network resumed block production on Thursday with empty blocks after software updates.
• Transactions and Bitcoin transfers into and out of Liquid remain suspended.

Unresolved Issues

The identity of the hackers has not been revealed. Blockstream is pursuing recovery through legal and forensic channels, but the outcome is uncertain.

Implications for the Crypto Community

The hack affects users of the Liquid Network, which is used by individuals and businesses to move Bitcoin. Blockstream's refusal to pay ransom sets a stance against extortion in crypto security incidents.

Next Steps in the Recovery Effort

Blockstream has urged the hackers to return the remaining Bitcoin voluntarily. Otherwise, the company will collaborate with authorities to trace the assets and identify those involved.

Source

• Cointelegraph