A purported white-hat attacker who withdrew roughly 4,000 BTC from Liquid Network’s federation wallet says they will return most of the bitcoin after confirming that a critical software vulnerability has been fixed. The attacker communicated with Blockstream via Bitcoin OP_RETURN messages and PGP-encrypted texts, instructing the team to patch every node first. Blockstream later responded on-chain that bridge nodes were patched and funds could safely be sent back. The BTC remains in the attacker’s wallet for now, while the Liquid Federation pauses network activity and urges exchanges to suspend LBTC deposits and withdrawals, and SideSwap keeps swaps, peg-ins, and peg-outs on hold.
This update represents a notable development in the Crypto sector. Organizations and founders tracking this space should evaluate potential strategic and technical implications on their operations.