- Blockstream will not pay ransom for 4,000 BTC stolen from Liquid Network.
- Roughly 85% of stolen bitcoin, over 3,400 BTC, has already been returned.
- Attackers exploited a bug in Elements software, not leaked private keys.
Blockstream said it will not pay a ransom after attackers stole roughly 4,000 BTC from the Liquid Network in a September 6 exploit, calling the incident a theft rather than a white-hat disclosure. More than 3,400 BTC, or roughly 85% of the stolen funds, has since been returned.
Why is Blockstream Refusing to Pay a Ransom?
Blockstream said in an X post on September 11 that it would not pay the ransom.
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The company behind the Liquid Network said it will not use user funds to pay a ransom or establish a precedent in which open-source software developers are forced to compensate attackers for returning stolen assets.
The company said the unauthorized seizure and continued withholding of Bitcoin constitutes theft rather than responsible vulnerability disclosure or white-hat activity.
Blockstream added that its negotiations with the holders of the funds have been conducted in good faith to secure the return of user assets.
Blockstream’s message to the attackers ended with a simple call: “Return the bitcoin.”
Liquid Network Hack Was Caused by Elements Software Bug
The attacker transferred the majority of roughly 4,000 BTC held in a wallet managed by the Liquid Alliance in a single transaction on September 6.
Blockstream said the breach resulted from a bug in Liquid’s underlying software, Elements, rather than a leak of private keys.
After deploying a corrected version of the software, block generation resumed on September 10 and normal transfer functions came back online. The peg-out function, however, remains suspended as a precaution as of September 11.
Blockstream’s negotiations with the attackers have continued via on-chain messaging since the incident. DailyCoin previously reported that 3,400 BTC had been returned, leaving about 598 BTC in the hands of attackers.
Blockstream Vows Legal Pursuit
Blockstream said it will work with law enforcement, exchanges, payment service providers and forensic experts to trace the remaining funds, pointing to Bitcoin’s transparent transaction history as an advantage in identifying those responsible.
The company framed its refusal to pay as a stand against setting a precedent that could force open-source developers to cover ransoms far exceeding their financial stake in a project.
It thanked the community for helping harden the network and recover user funds, while repeating its call for the attackers to return the remaining bitcoin.
Why This Matters
The Liquid Network hack highlights the security risks facing Bitcoin sidechains and other layer-2 infrastructure, even when most stolen funds can be recovered without paying a ransom.
Blockstream’s refusal to negotiate a payment could also shape how other open-source projects respond to future extortion attempts.
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