Blockstream Rejects Ransom as Liquid Hackers Hold Nearly 600 BTC
Bitcoin infrastructure firm Blockstream has refused to pay a ransom to hackers who still hold nearly 600 BTC stolen from the Liquid Network. Following the September 6 incident where about 4,000 BTC were withdrawn—with 3,400 BTC returned—the hackers demand a 10% bounty. Blockstream is working with law enforcement and urging the hackers to voluntarily return the remaining funds, while Liquid has resumed limited block production after emergency updates.
Liquid Incident and Hacker Demands
On September 6, Liquid, a Bitcoin sidechain, paused its operations after self-identified white-hat hackers withdrew approximately 4,000 BTC (about $320 million at the time) from its federation wallet.
Following the withdrawal, the actors returned 3,400 BTC, leaving around 598 BTC still held by them.
The hackers demanded a 10% bounty from the total stolen amount via an on-chain message shared by Jan3 CEO and former Blockstream Chief Strategy Officer Samson Mow.
They warned that if their demands were not met, Liquid holders could suffer losses of up to 15%.
Blockstream’s Response and Next Steps
Blockstream stated that taking assets without authorization and withholding their return is a crime, not responsible disclosure, and that it would not pay ransom.
The company engaged with the hackers in good faith to recover user funds but rejected their demands.
Blockstream urged hackers to return the remaining Bitcoin voluntarily and announced plans to collaborate with law enforcement, exchanges, service providers, and forensic specialists to track and identify the perpetrators.
Liquid resumed block production on Thursday producing empty blocks following emergency software updates, but transactions and Bitcoin transfers remain suspended.
Why it matters
This news is significant as it highlights Blockstream’s stance on a major security breach within the Bitcoin ecosystem. Their refusal to pay ransom emphasizes a firm approach against criminal acts without compromise. The partial recovery of stolen funds reflects technical efforts and engagement with the hackers despite their unethical conduct. The incident underscores challenges in securing sidechains and the necessity of cooperation with law enforcement and forensic experts to protect users and the liquidity of the Liquid Network.
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