Bitcoin infrastructure company Blockstream will not pay a ransom to the hackers still sitting on funds drained from the Liquid Network.
Theft, not disclosure
The company said Friday that it had engaged with the attackers in good faith to recover user funds, but would not meet their demands.
Blockstream wrote:
“Taking assets without authorization and withholding their return is a crime, not responsible disclosure. It is not white-hat activity. It is theft.”
The hackers had asked for a 10% bounty paid out of Blockstream’s own funds, a demand delivered in an onchain message shared Wednesday by Jan3 CEO and former Blockstream chief strategy officer Samson Mow.
They warned that Liquid holders would otherwise be left absorbing a 15% loss.
How the exploit unfolded
Liquid, a Bitcoin sidechain, paused operations on Sept. 6 after self-described white-hat hackers pulled about 4,000 BTC, then worth roughly $320 million, out of its federation wallet.
Most of that has since come back.
The actors returned 3,400 BTC once Blockstream said the affected bridge nodes had been patched, leaving about 598 BTC outstanding, worth close to $46 million at bitcoin’s current price near $77,000.
Network still partly frozen
Liquid resumed block production on Thursday following emergency software updates, though the chain is only turning out empty blocks for now.
Transactions and Bitcoin transfers into and out of the network remain suspended.
Blockstream asked the hackers to hand over the remaining coins voluntarily.
If they do not, the company said it would work with law enforcement, exchanges, service providers and forensic specialists to trace the assets and identify those responsible.
