Blockstream has refused to pay a ransom or reward to recover the remaining Bitcoin taken from the Liquid Network, standing by its position that the unauthorized removal of assets was theft, not responsible disclosure.

The incident began with the withdrawal of roughly 4,000 BTC, worth about $320 million at the time, from Liquid’s reserves. The attackers claimed to be white-hat hackers and demanded engagement with Blockstream while holding the funds.

 

CASE STUDY | Bitcoin Settlement Network, Liquid, Hit by Over $300 Million Exploit

 

About 3,400 BTC was later returned, leaving roughly 598.5 BTC still controlled by the attackers. On-chain messages show the dispute has effectively played out in public, with the Bitcoin blockchain preserving the evidence of the movements.

 

Blockstream’s refusal matters because paying for the return of stolen assets could create a dangerous incentive:

Compromise a protocol, take the assets, and then negotiate a reward for giving them back.

 

The company is instead treating the remaining Bitcoin as stolen property and says it will work with law enforcement, exchanges, service providers, and forensic experts to identify those responsible and recover the funds through legal means.

 

BlockStream said:

Bitcoin is transparent by design and the community is made up of the most sophisticated engineers, cryptographers, and white-hat hackers globally. Transactions do not disappear, and neither does the evidence they leave behind.

We will not pay for the return of stolen property.

We will not abandon our users.

The Bitcoin community will not stop pursuing the funds.

 

That position is becoming more consequential as crypto protocols increasingly hold institutional-scale assets.

 

Blockstream is therefore betting that refusing to negotiate is the stronger long-term precedent:

Vulnerabilities can be rewarded, but stolen assets should not become bargaining chips.

 

 

CASE STUDY | How This DAO Settlement Sets a Precedent on Future DAO Dispute Resolutions

 

 

 

 

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