Liquid Network Fully Restores Its Bitcoin Reserves

The Liquid Federation, which runs the Bitcoin sidechain Liquid, says the network's reserves have been fully restored and every LBTC is again backed 1:1 by bitcoin. The last 250 BTC reached a federation wallet on Nov. 2, about two months after the Sept. 6 exploit.

Details

The breach came on Sept. 6, when a bug in Elements, the software behind Liquid, let an attacker mint roughly 4,000 LBTC with no bitcoin behind them and cash them out for real BTC (TRM Labs analysis). On Sept. 7 the attacker returned about 3,400 BTC and kept roughly 600 BTC.

According to Cryptonews, a transfer of exactly 250 BTC closed the remaining gap: reserves stand at 4,268.95 BTC against the same amount of LBTC in circulation, 100% coverage. Bitcoin.com News, citing Samson Mow, reports the same 250 BTC; the source of the funds has not been disclosed. The federation says reserves can be checked through Liquid nodes and a public dashboard, and that swaps between BTC and LBTC are back at 1:1 (PANews). It also plans to modernize governance and add technical and operational safeguards.

Cryptonews notes the announcement does not mean every peg-out restriction is lifted; that depends on security audits and the Oct. 20 recovery plan.

What this means for the market

For LBTC holders, the main risk of an unbacked token is gone. Open questions remain on governance and code safety, which the federation says it will address. For the wider hack picture see our Q3 losses report. For the live bitcoin price, see the daily brief.