Hackers Return $270 Million in Bitcoin After Liquid Network Breach

Hackers Facilitate Return of Stolen Bitcoin

A group claiming to be ethical hackers has returned 3,400 of the approximately 4,000 Bitcoin (BTC) stolen from the Liquid Network, amounting to about $269.2 million. This recovery represents the return of approximately 85% of the misappropriated funds.

The return came after confirmations from Blockstream, the developers of the Liquid sidechain, that the security of its bridge nodes had been restored. However, around 600 BTC, valued at approximately $47 million, still remains unreturned.

The security incident began on Sunday when a user attempted to transfer 4,000 Liquid Bitcoin (L-BTC) to SideSwap’s peg-out service. The hackers identified themselves via a Bitcoin transaction, asserting their role as “white hats” aiming to assist in mitigating security vulnerabilities. Despite this, skepticism regarding their intentions remains, particularly from industry figures like Charles Guillemet, CTO at Ledger, who described the situation as more resembling extortion than true ethical hacking.

After the breach, Liquid Network took immediate action by disabling its bridge nodes and asking exchanges to suspend L-BTC transactions. With the nearly 600 BTC still unreturned, Liquid has not provided details regarding their recovery or the timeline for resuming operations for its services.

The hackers communicated with Blockstream, insisting that security issues be resolved before returning the funds. Once Blockstream confirmed that the situation was rectified, the hackers returned the bulk of the stolen Bitcoin but have yet to explain why they still hold onto a portion of it.