Hackers steal $320M in bitcoin from Liquid Network, return most of it after patch

Hackers stole about $320 million worth of bitcoin over the weekend from a blockchain platform called the Liquid Network.

In a somewhat unusual development, the attackers returned most of the haul earlier today. They retained 598 of the 4,000 stolen bitcoin, or about $47 million worth. The hackers stated that they would keep the funds as a “bounty” for bringing attention to a vulnerability in the Liquid Network.

The Liquid Network was launched in 2018 by a venture-backed cryptocurrency company called Blockstream Inc. It’s a layer two Bitcoin network, a blockchain built on the infrastructure that powers Bitcoin. Such blockchains are also known as sidechains.

Bitcoin processes user transactions through a decentralized process. When a bitcoin holder moves funds, thousands of user-operated servers called full nodes verify the authenticity of the transaction. From there, a user with bitcoin mining hardware formalizes the transaction by performing an energy-intensive processing task.

The Liquid Network replaces Bitcoin’s transaction approval process with a more centralized workflow. The task of verifying payments is performed by a group of about 80 organizations. They include cryptocurrency wallet providers, exchange operators and various other industry players. At any given time, only about 15 of the organizations play an active role in verifying transactions.