The attacker demanded 10% of the remaining 600 bitcoins from the Liquid Network vulnerability.

The mastermind of the Blockstream sidechaft incident: Accusing the company of "delusion, greed and arrogance" and launching a reward confrontation over the return of the remaining 600 bitcoins

The person behind the theft of funds from Blockstream's Liquid Network has issued a new requirement that links the return of the last 600 remaining bitcoins to a condition. According to reports, the hackers demanded a reward of 10% of the remaining amount as a prerequisite for returning the funds.

Liquid Network is a Bitcoin sidechain developed by Blockstream that aims to allow exchanges, institutions and traders to achieve faster speed and higher privacy than when settling transactions on the main Bitcoin blockchain. Because the network pools reserves from multiple participants, any intrusion into the network will have an impact that goes beyond a single company's balance sheet.

During the negotiations, hackers reportedly used fierce rhetoric about Blockstream, describing the company as "delusional, greedy and arrogant." The wording suggests that negotiations on the bounty have become hostile, with the two sides clearly having huge differences on what constitutes a fair solution.

Bounty negotiations after cryptocurrency theft are not uncommon. Project parties sometimes provide a percentage of stolen funds as rewards for return and package such payments as "white hat bounties" rather than ransom ransom. This approach avoids costly legal disputes and the uncertainty of relying solely on law enforcement to recover assets. However, it also sets a precedent that could encourage future attackers to view negotiation as a viable exit strategy.

The fact that 600 bitcoins are still unresolved suggests that some of the originally stolen funds may have been recovered, frozen or otherwise disposed of. The current balance appears to be the point of deadlock in ongoing discussions between Blockstream and the party holding the coins. Current reports do not detail the specific timeline of previous partial recoveries or the total amount originally stolen.

It is reported that Blockstream has not publicly agreed to the 10% amount. The tone attributed to the hacker suggests that he is dissatisfied with the counter-proposal or the progress of the negotiations. Such disputes could drag on for months as both sides weigh reputational risks, legal exposure risks and the practical difficulties of tracking and freezing Bitcoin after funds are moved through mixers or multiple wallets.

For a company built on its reputation for Bitcoin infrastructure and security tools, the long-standing public debate over hacking has additional weight. Institutional users of Liquid Network rely on the platform's reputation for safe clearing, and unresolved incidents can raise questions about custody practices and incident response.

Market Impact

Public confrontations about stolen funds often lead to reviews of the security practices of affected platforms, which may affect institutions 'confidence in sidechain settlement products. Liquid Network's role in facilitating exchanges and over-the-counter (OTC) desk trading means that any long-term uncertainty may cause some participants to reassess counterparty risk and custody risk.

Given the relatively limited amounts involved, it is unlikely that the entire Bitcoin market will be directly affected by prices as a result of a bounty dispute of this magnitude. However, the incident has intensified ongoing discussions within the industry about how exchanges and infrastructure providers should handle hacking negotiations, especially when demands escalate into public disputes rather than private settlements.

The fate of the remaining 600 bitcoins was still in the balance before Blockstream reached an agreement with hackers, leaving the broader Liquid Network incident unsettled.

FAQs

What is a Liquid Network?

Liquid Network is a Bitcoin sidechain built by Blockstream that allows exchanges and institutional traders to make faster and more private settlements.

What requirements did the hacker put forward?

The hackers reportedly demanded a reward equivalent to 10% of the remaining 600 bitcoins in exchange for returning the funds to Blockstream.

Does Blockstream agree to pay the reward?

There are currently no reports that Blockstream has publicly agreed to the 10% request, and negotiations appear to be unresolved.

Why do companies sometimes pay bounties to hackers?

Paying a bounty can recover stolen funds faster and at a lower cost than pursuing legal action or enforcement action, but it may also encourage future attacks.