- Blockstream refuses to pay ransom for 598.5 BTC still held after the Liquid Network exploit
- Hackers returned 3,400 BTC (85% of stolen funds) on Monday, but negotiations failed
- The company will work with law enforcement, exchanges, and forensic specialists to trace the remaining Bitcoin
Blockstream has declined to pay for the return of approximately 598.5 BTC, worth about $47 million, still missing from the Liquid Network after last weekend’s exploit. The company declared Friday it “will not pay a ransom for the return of stolen funds”, calling the incident “theft, not responsible disclosure” according to its statement on X.
Roughly 4,000 BTC, valued at $320 million, were drained from the sidechain on Sunday. Hackers returned 3,400 BTC the following day, leaving 598.5 BTC at the withdrawal address where it remains unmoved.
The attackers exploited a flaw in how Liquid nodes cache range proof verifications, allowing them to mint unbacked L-BTC and swap it for reserve Bitcoin. Blockstream patched the bridge nodes within ten hours and shipped Elements v23.3.4 on Wednesday; Liquid resumed block production Thursday, though peg-outs remain disabled.
On Wednesday, the exploiters wrote in a Bitcoin transaction message that Blockstream had allocated “only $1.5M (maybe even 0) to secure $5B assets”, calling it a “flagrant neglect of security.” They demanded a 10% bug bounty using the company’s own money, threatening a 15% loss for holders otherwise.
Blockstream refused to set a precedent that open-source developers should pay ransoms exceeding their economic participation. It also stated it will not haircut users: “Bitcoin doesn’t haircut users to pay a ransom.”
Instead, the company will pursue “every lawful avenue” with law enforcement, exchanges, and forensic specialists should the funds not be returned. “Transactions do not disappear, and neither does the evidence they leave behind,” it warned, closing: “Return the bitcoin.”
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