The Liquid Federation confirmed on Monday that the sidechain’s Bitcoin reserves have been fully restored, reestablishing a 1:1 backing for all LBTC tokens.
In September, individuals claiming to be white‑hat hackers withdrew about 4,000 BTC (approximately $320 million) from the federation’s wallet. They returned roughly 3,400 BTC (about $269 million) the following day but retained around 598 BTC.
Blockstream CEO Adam Back shared a dashboard screenshot showing assets matching liabilities at 100 % with a reserve deficit of 0.00 BTC. Users operating their own Liquid nodes can independently verify the federation’s reserves.
Security enhancements
Back outlined three hardened defenses: refreshed peg‑out authorization keys stored in cold hardware wallets, disabled proof‑validation caches with a node bug fix, and consensus rules designed to “fail closed.” The network has also undergone multiple third‑party audits.
Back cautioned developers to treat AI‑suggested fixes with suspicion, emphasizing verification over blind trust.
Governance updates
The federation said it is modernizing Liquid’s governance structure, adding clearer responsibilities, oversight, and additional technical safeguards. Further details are expected in the coming weeks.
Background on the exploit
The September 6 incident involved PGP‑signed messages embedded in Bitcoin transactions to communicate with Blockstream. After the breach, Blockstream patched the bridge nodes and refused to pay a ransom for the remaining BTC, describing the act as theft rather than responsible disclosure.
