Liquid Network Restores Full Bitcoin Backing Two Months After $320M Exploit

In brief

• The Liquid Federation said the sidechain's Bitcoin reserves have been fully restored, reestablishing 1:1 backing for all LBTC after a September exploit.
• Purported white-hat hackers withdrew about 4,000 BTC from the federation wallet in September, returning 3,400 BTC but keeping around 598 BTC.
• Back said key systems have been hardened and audited, and urged developers to treat AI-suggested fixes "with suspicion."

The Liquid Network's Bitcoin reserves have been fully restored, two months after self-described white-hat hackers drained most of them, the Liquid Federation said on Monday.

The federation said it had reestablished 1:1 Bitcoin backing for all LBTC, the token that represents Bitcoin on Liquid. The milestone follows the restoration of swaps between BTC and LBTC at a 1:1 rate through participating providers several weeks ago, it said.

Blockstream CEO Adam Back, whose company develops the technology behind Liquid, posted a screenshot of the network's dashboard showing assets matching liabilities at 100%, with a reserve deficit of 0.00 BTC. Users running their own Liquid nodes can verify the federation's reserves directly, the federation said.

It did not say how the shortfall left by the hack was covered.