The Liquid Network has resumed operations following a security incident in September where hackers exploited an inflation bug to misappropriate 4,000 bitcoin. The network is now entering the final stages of recovery, which includes restoring full 1:1 bitcoin backing and reactivating peg-outs for authorized key holders.
Blockstream, the developer behind the layer-2 sidechain, managed to negotiate the return of the majority of the funds. While the network has restored service for swaps between LBTC and mainchain BTC, the hackers retained approximately 600 bitcoin, representing 15% of the stolen assets, currently valued at nearly $50 million.
The attackers initially claimed to be white hat hackers, though they demanded a 10% bounty and threatened to leak encrypted communications. It remains unclear whether Blockstream reached a formal private settlement with the individuals involved. CEO Adam Back confirmed that swap functionality is now fully operational.
