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Liquid Network Announces Final Stages of Recovery Following Massive Hack

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Liquid Network Announces Final Stages of Recovery Following Massive Hack

Bitcoin Magazine

Liquid Network Announces Final Stages of Recovery Following Massive Hack 

The Liquid Network on Tuesday said that things were up and running again, over one month after hackers stole 4,000 bitcoin, worth about $320 million at the time, from the network’s federation wallet before returning most of it in a “white hat” operation.

Writing in a blog post, the Liquid Network said that it was entering “the final stages of recovery with enhanced security.” 

Hackers in September stole 4,000 bitcoins from the federation wallet that backs the Blockstream sidechain. Blockstream was able to negotiate to get back most of the funds. 

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“The final phase of restoration involves reestablishing the network’s full 1:1 bitcoin backing, followed by the controlled reactivation of Federation peg-outs for authorized PAK key holders,” the Liquid blog post read. 

“The Federation, Blockstream, and independent security experts have made substantial progress toward this objective, with the necessary technical infrastructure and safeguards now in place.”

The post added that it had introduced phased swaps again. Blockstream CEO Adam Back wrote on X on Tuesday that swaps were working again. 

Liquid is a layer-2 created by Blockstream that allows users to quickly move assets backed 1:1 with bitcoin. People can swap stablecoins for bitcoin and bitcoin on the Lightning Network on apps that support the Liquid Network. 

Hackers were able to get 4,000 bitcoins by exploiting an inflation bug on the Liquid sidechain to create over 4,000 LBTC — a token supposedly backed by bitcoin — that did not exist before and cash them out for real on-chain BTC.


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