Hackers Send Back $270M in Bitcoin to Liquid Network Ahead of Restart

Attackers who pulled roughly 4,000 Bitcoin from the Liquid Federation wallet have sent back 3,400 BTC, worth close to $270 million, after the network’s operator confirmed a security patch was in place. The recovery covers about 85% of the funds taken during Sunday’s breach, which drained most of the wallet’s 4,200 BTC reserve. A JAN3 executive and former Blockstream leader said roughly 598 BTC remains with the attackers, with talks still ongoing.

Bug Traced to Peg-Out Process

The original transfer moved through a partner platform’s withdrawal authorization system, though that key itself wasn’t breached. The root issue was linked to a flaw in Elements, the software Liquid runs on. Blockstream reached the attackers using signed messages on the blockchain itself.

Restart Still Pending

Officials say the sidechain stays offline while teams finish security checks and settle a chain split. Users have been told to avoid sending funds to Liquid addresses until service resumes. A Ledger executive questioned whether the remaining balance amounts to a negotiated reward rather than a true white-hat return.