Bitcoin News
By Bruce Buterin
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How 4,000 BTC Left the Building. The federation's own keys stayed intact, per the network's account.
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Partial Return, Big Questions. The actors did come back. In an unexpected move, they returned 3,400 BTC to the Liquid Federation…
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What's Still Broken. The Peg-out Authorisation Key sits at the center of this whole thing.
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Roughly $320 million walked out of the Liquid Federation wallet in a single weekend. And the network still can't fully explain how.
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On Sunday, actors described as "purported white-hat hackers" pulled approximately 4,000 BTC from the Liquid Federation wallet, targeting a component called the Peg-out…
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Not compromised. That's what Liquid Network said about its federation keys.
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The federation's own keys stayed intact, per the network's account. A software vulnerability in the L-BTC issuance and redemption process seems to be the real culprit — one that…
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The reserve backing the L-BTC peg was basically gutted. Of the 4,200 BTC sitting in that wallet, 4,000 walked out.
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Comparisons to past bridge disasters came fast. The 2022 Wormhole breach and Nomad's message-verification failure both involved unbacked wrapped assets — situations where the…
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The actors did come back. In an unexpected move, they returned 3,400 BTC to the Liquid Federation address, with the transaction going through at Bitcoin block 965,950.
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Related: Blockstreams Liquid Network Suspended as 4,000 Bitcoin Bug Exposed, Draining $320 Million
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But 598.5 BTC — worth roughly $47 million — stayed with the actors as of September 7. No confirmation of further repayment. No timeline.
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And Liquid Network still hasn't put out a full technical post-mortem. That's the part that's probably frustrating stakeholders most.
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Bridge nodes remain inactive. L-BTC transactions are still on hold. The network's operational capacity is significantly reduced, and exchanges are sitting on suspended withdrawal…
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The Peg-out Authorisation Key sits at the center of this whole thing. It's the piece that makes the Bitcoin conversion process work — the mechanism SideSwap manages on behalf of…
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