Blockstream says it will not pay a ransom for the roughly 598.5 BTC still held by the actors behind the Sept. 6 Liquid Network exploit, after recovering 3,400 BTC of the nearly 4,000 BTC withdrawn. The company called the standoff theft rather than white-hat disclosure, and a rival security group says it warned Blockstream about the underlying bug before the hack happened.
Blockstream has refused to pay a ransom for the roughly 598.5 BTC still controlled by the actors behind the Liquid Network exploit. That holdout persists even though 3,400 BTC was returned to the federation wallet earlier this week.
Blockstream rejects ransom, calls holdout theft
In an X post on Sept. 11, Blockstream said taking assets without authorization and withholding their return amounts to theft, rejecting the actors' description of their conduct as white-hat activity. According to Blockstream: "We will not pay a ransom for the return of stolen funds."
The statement follows days of talks after nearly 4,000 BTC was withdrawn from Liquid's federation wallet on Sept. 6. The actors later demanded a 10% bounty paid from Blockstream's own funds, and the company has now rejected any payment tied to the return of the remaining coins.
Cause traced to a patched cache-key flaw
The exploit stemmed from a cache-key collision in confidential transaction verification logic on the Liquid sidechain, and Blockstream said its federation keys were never compromised. The remaining Bitcoin was worth close to $47 million when the larger repayment was completed.
Bitcoin Red Team co-lead Calle said the group had already flagged the underlying bug to Blockstream, arguing that founder Adam Back's account of the disclosure history was incomplete. Former Blockstream CSO Samson Mow disputed the claim, saying no warning emails were ignored.
Liquid resumes transactions, peg-outs stay frozen
Liquid restarted block production on Sept. 10 and later re-enabled transactions, though peg-outs remain disabled as a precaution with no timeline given for their return. Blockstream said it will work with law enforcement, exchanges, forensic specialists and other service providers to trace the outstanding Bitcoin.
Sources: crypto.news, Bitcoin.com
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