Exclusive · Satire
Liquid's bitcoin IOUs are whole again, and the 'white-hat' hackers kept 598 BTC for their trouble
Self-described white-hat hackers took about 4,000 BTC from Liquid, sent back 3,400 and kept roughly 598. Now the reserves are 1:1 again, by means not disclosed.
By Connor O'Brien ·
Why it matters: Liquid's IOUs are only as good as the reserves behind them, and it hasn't said how it filled a hole left by hackers.
For information only, not investment advice.
Good news for anyone holding a bitcoin IOU on Liquid: the IOU is an IOU for a whole bitcoin again. Per Decrypt, Liquid posted on X: “Update from the Liquid Federation: The Liquid Federation is pleased to announce that the network’s bitcoin reserves have been fully restored, reestablishing 1:1 BTC backing for all LBTC.”
Some history, for anyone who missed the most polite heist of the year. Per Decrypt: “On September 6, purported white-hat hackers withdrew about 4,000 BTC, then worth around $320 million, from Liquid's federation wallet, communicating with Blockstream through PGP-signed messages embedded in Bitcoin transactions.” Nothing says “we're the good guys” like leaving a note inside the getaway car.
Then came the gesture of goodwill: “The next day, they returned 3,400 BTC, worth about $269 million, after Blockstream said Liquid's bridge nodes had been patched, but kept roughly 598 BTC.” Call it a finder's fee, set by the finder. A locksmith who asked not to be named because he is a raccoon told Sainteur he admired the business model: “You break in, you tidy up, you keep the silverware. Very ethical.”
Blockstream wasn't charmed. "Taking assets without authorization and withholding their return is a crime, not responsible disclosure," the company said. "It is not white-hat activity. It is theft."
So where did the missing coins come from? Blockstream CEO Adam Back posted a dashboard showing assets matching liabilities at 100% and a reserve deficit of 0.00 BTC. As for how the gap was filled, Decrypt reports: “It did not say how the shortfall left by the hack was covered.” The ledger is balanced. The story behind it isn't.
Back did share one lesson for the industry: "And lesson: treat with suspicion (don't trust, verify) AI suggested fixes," Back wrote. Our raccoon agrees. He has never trusted a fix he didn't steal himself.
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Tags: bitcoin · defi