Liquid Network Restores Full Bitcoin Backing Two Months After $320 Million Exploit
Liquid Network Says Bitcoin Reserves Are Fully Restored
The Liquid Network has restored its full bitcoin backing about two months after hackers drained roughly $320 million worth of bitcoin from the network, the Liquid Federation said on Monday.
The federation said it reestablished 1:1 backing for all LBTC, the token that represents bitcoin on Liquid. Liquid is a Bitcoin sidechain, a separate blockchain that runs alongside Bitcoin and is designed for faster and more private transfers. Users running their own Liquid nodes can verify the federation's reserves directly.
Key Details From the Report
- The network's bitcoin reserves are fully restored, with 1:1 BTC backing for all LBTC.
- Purported white-hat hackers withdrew about 4,000 BTC, then worth around $320 million, on September 6.
- The hackers returned 3,400 BTC, worth about $269 million, the next day but kept roughly 598 BTC.
- Blockstream CEO Adam Back said key systems have been hardened and audited.
- The federation is modernizing Liquid's governance and plans to share more details in the coming weeks.
What the Liquid Federation Announced
The Liquid Federation announced on X that the network's bitcoin reserves have been fully restored, reestablishing 1:1 BTC backing for all LBTC. This follows the restoration of swaps between BTC and LBTC at a 1:1 rate through participating providers several weeks ago. Blockstream CEO Adam Back shared a screenshot of the network's dashboard showing assets matching liabilities at 100 percent, with a reserve deficit of 0.00 BTC.
Confirmed Facts
- Liquid Network reserves were fully restored as announced on November 3, 2026.
- All LBTC now has 1:1 bitcoin backing.
- About 4,000 BTC were withdrawn from the federation wallet on September 6, then worth around $320 million.
- About 3,400 BTC were returned the next day, worth about $269 million.
- Roughly 598 BTC were not returned.
- Back said three lines of defense were hardened: peg-out authorization keys moved to cold hardware wallets, proof validation caches disabled with a node bug fix, and consensus rules set to fail closed.
- The network underwent multiple third-party audits.
What Remains Unclear
- The federation did not say how the shortfall left by the hack was covered.
- Blockstream refused to pay a ransom for the remaining bitcoin and called the withholding of funds theft, not white-hat activity.
- Ledger CTO Charles Guillemet said that if the remaining coins were a negotiated reward, the arrangement looked "more like extortion than white-hat hacking."
Why This Matters for Users
The restoration means users can swap LBTC back to bitcoin at a 1:1 rate through participating providers. Users can verify the federation's reserves directly by running their own Liquid nodes. Liquid, launched by Blockstream in 2018, lets users lock up BTC in a wallet controlled by the federation and receive the same amount of LBTC in return.
What Comes Next
The federation said it is modernizing Liquid's governance structure, introducing clearer responsibilities and oversight, and adding further technical and operational safeguards. More details are expected in the coming weeks.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.