Blockstream has officially refused to negotiate with hackers who exploited an inflation bug in its Liquid sidechain. The attack allowed the perpetrators to generate over 4,000 LBTC tokens and exchange them for on-chain bitcoin. Following initial negotiations, the hackers returned a portion of the funds but retained 598.5 bitcoins, valued at over $46 million, as a ransom payment.
The company stated that it will not pay any ransom, characterizing the unauthorized retention of assets as theft rather than responsible disclosure. Blockstream has announced plans to collaborate with law enforcement, cryptocurrency exchanges, and forensic specialists to track the stolen assets and identify the individuals responsible for the breach.
The attackers, who communicated with the firm through messages embedded in Bitcoin blocks, demanded a 10% bounty. They threatened to release encrypted correspondence from the negotiation process if their terms were not met. Blockstream maintains that it will continue efforts to recover the remaining funds to protect its users.
