$47M Still Missing After Liquid Hack as Blockstream Bargains With 'White Hats'

In brief

• Blockstream is in talks to recover approximately 598.5 BTC still outstanding after the Liquid exploit.
• The individuals responsible returned 3,400 BTC on Monday, leaving roughly 15% unreturned.
• A software flaw allowed unbacked L-BTC to be exchanged for reserve Bitcoin, Liquid said.

Liquid Network said Tuesday that Blockstream, the Bitcoin infrastructure company behind the sidechain, is in ongoing talks with the hackers who exploited the network for roughly $320 million to fully recover the stolen funds.

“Discussions between Blockstream and the individuals responsible are ongoing to secure the return of the remaining funds,” Liquid said in an incident report on X.

The talks stem from Sunday’s withdrawal of approximately 4,000 BTC, after a flaw in Liquid’s underlying Elements software allowed the creation of unbacked L-BTC tokens that were exchanged for reserve Bitcoin. The hackers returned 3,400 BTC Monday, leaving about 600 BTC, valued at roughly $47 million, outstanding.

Liquid did not say what the terms of the talks were or provide a timeline for recovering the remaining BTC.

According to Liquid, after stealing the tokens, the still-unknown individuals exchanged the BTC through SideSwap, a Liquid Federation member operating a withdrawal service. The software’s transaction checks accepted the unbacked tokens as valid before the withdrawal began.