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BTC Blockstream refuses to pay ransom to hackers to recover stolen funds
Bitcoin infrastructure company Blockstream has terminated negotiations with hackers. Previously, hackers stole 4,000 bitcoins from its Liquid sidechain. Blockstream made it clear that it would not pay ransom to return the remaining funds.
Stolen funds and ransom dispute
Hackers took advantage of the Liquid Network, a Layer-2 solution developed by Blockstream. The program aims to facilitate the rapid, confidential transfer of assets backed by Bitcoin 1:1. The exploit allowed attackers to create more than 4,000 LBTC (Liquid Bitcoin) and exchange them for real bitcoins, resulting in the illegal transfer of approximately $320 million in assets.
After preliminary communication with Blockstream, the attacker returned most of the stolen coins. However, they withheld 598.5 bitcoins (worth more than $46 million) and demanded 10% of the total amount as a "vulnerability bounty" in exchange for a full refund.
Blockstream publicly stated on the X platform that it will never pay ransom, emphasizing: "Unauthorized acquisition of assets and withholding them for return is a criminal act, not a responsible security disclosure. This is not white hat activity, but theft."
Blockstream announced that paying ransom for the return of Bitcoin is impossible: "We will not pay for the return of stolen property. We will not abandon our users. The Bitcoin community will continue to track down these funds."
Continuing Threats and Hacking Requirements
Hackers communicate with Blockstream through information embedded in Bitcoin blocks. In the messages, they urged Blockstream to immediately resolve the vulnerability and promised to return funds once the vulnerability was fixed. A recent message from them accused Blockstream of being "paranoid, greedy and arrogant" and threatened to disclose all of Blockstream's encrypted communications unless they were allowed to keep 10% of the stolen bitcoins.
One message read: "You must pay 10% of your own money as a loophole bounty, otherwise you will cause all holders to suffer a 15% loss due to your irresponsibility and stingy."
Blockstream's response and community impact
Blockstream reiterated that it will work with law enforcement agencies, exchanges, forensic experts and other stakeholders to track down, recover and identify those responsible for the incident.
Liquid is a well-known layer 2 solution launched by Blockstream that aims to enhance the functionality of the Bitcoin network by enabling fast, low-cost and confidential settlement of digital assets, including LBTC. LBTC tokens are pegged to Bitcoin, providing users with a way to trade in an environment of distrust and ultimately convert back to Bitcoin without trust.
Tips: Blockstream is a leading Bitcoin infrastructure technology company known for its development of Liquid sidechains and its contribution to the Bitcoin Layer-2 solution.
The theft follows a recent series of high-profile Bitcoin security breaches. In July this year, hackers also targeted Coldcard wallet holders and stole more than 1,800 bitcoins worth nearly $140 million. According to reports, Coinkite, the company behind Coldcard, relied on unsafe random number generators, resulting in a vulnerability in its wallet, allowing attackers to guess users 'mnemonic words.
Comparative analysis of cases
These two incidents have heightened concerns about security standards within the broader Bitcoin ecosystem and prompted continued efforts to strengthen infrastructure and cooperation among stakeholders.
