Liquid Network Says Bitcoin Reserves Are Fully Restored

Technology · First reported 3 Nov, 11:12 · Updated 11:40

Image: Wikimedia Commons · NASA Johnson Space Center · Public domain

The Liquid Federation says reserves now provide 1:1 Bitcoin backing for all LBTC, following September’s exploit. Reports agree that backing is restored but differ on who supplied the funds: Decrypt says the federation did not identify the source, while The Block says Blockstream provided them.

The federation announced that reserves were restored to 1:1 backing for all LBTC, after BTC-LBTC swaps had resumed several weeks earlier.
On September 6, purported white-hat hackers withdrew about 4,000 BTC, then valued at roughly $320 million; they returned 3,400 BTC the next day and retained about 598 BTC.
Decrypt reports the federation did not explain how the remaining shortfall was covered. CoinDesk says a final 250 BTC transfer closed the gap but does not identify the payer; The Block attributes the funds to Blockstream.
Adam Back listed updated peg-out authorization keys kept in cold hardware wallets, disabled proof-validation caches with a node bug fix, and hardened consensus rules among the security changes. He also said the network had undergone multiple third-party audits.
The federation said it is updating Liquid’s governance structure and adding technical and operational safeguards, with further details expected in the coming weeks.

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Key facts

Restored backing: 1:1 BTC backing for all LBTC, according to the Liquid Federation.
Exploit date and amount: September 6; about 4,000 BTC, then worth around $320 million.
BTC returned: 3,400 BTC the following day; about 598 BTC remained with the hackers, according to Decrypt.
Funding account: Decrypt says the federation did not disclose how the shortfall was covered; The Block says Blockstream provided the funds.