CoinDesk
Liquid Network has recovered 3,400 of the 4,000 BTC withdrawn from its federation wallet after Sunday's breach, leaving about 598 BTC, worth roughly $47 million, outstanding. The attack drained nearly the entire reserve, with only 197 BTC left in the wallet, and left L-BTC temporarily under-backed.
Blockstream and federation members disabled bridge nodes and paused Liquid while they applied fixes to the affected infrastructure. The network also has to resolve a chain split created during the pause and complete additional security improvements before restarting.
Why it matters
Liquid is a Bitcoin sidechain built by Blockstream. Its model relies on every L-BTC being matched one-for-one with bitcoin held in a shared federation wallet, so the missing reserve directly threatened confidence in the token. Other assets issued on Liquid, including tether, were not affected by the theft.
The attackers identified themselves as white-hat hackers and communicated through messages written into Bitcoin transactions. After the affected bridge nodes were patched, they returned most of the funds, easing the immediate collateral shortage but leaving the incident unresolved.
Market impact
The 3,400 BTC return reduces the amount still at risk, but the network's operational and collateral risks remain significant while 598 BTC is missing. Liquid remains paused, and exchanges were told to freeze L-BTC deposits and withdrawals. Users do not need to take action, but Blockstream warned against sending Bitcoin to Liquid peg-in addresses until a safe restart is confirmed.
The next test is whether operators can restore the chain, verify that L-BTC is fully backed and rebuild market confidence after an attack that exposed weaknesses in a key federation and bridge layer.
Frequently asked questions
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How much Bitcoin did Liquid recover from the breach?
Liquid recovered 3,400 BTC of the 4,000 BTC withdrawn from its federation wallet. Approximately 598 BTC, worth roughly $47 million, remains outstanding.
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Why was the missing Bitcoin a problem for L-BTC?
Every L-BTC is supposed to be matched one-for-one with bitcoin held in the federation wallet. The withdrawal left only 197 BTC in reserve and temporarily made L-BTC under-backed.
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What is Liquid doing before restarting?
Blockstream and federation members are applying additional fixes, improving security, resolving a chain split and preparing for a safe restart. Bridge nodes were disabled and the network remains paused.
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Were other assets on Liquid affected?
Other assets issued on Liquid, including tether, were not affected. The impact centered on the bitcoin federation wallet and the collateral backing L-BTC.
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Do users need to take action?
No user action is needed, according to Samson Mow. He warned users not to send Bitcoin to Liquid peg-in addresses until the network restart is confirmed.
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