Blockstream refused to pay the 600 BTC demanded by the hackers who withdrew around 4,000 BTC from the Liquid Network on September 6, worth more than $300M. After returning part of the funds, they kept around 600 BTC, calling it a reward for discovering the vulnerability and claiming that they had acted as white-hat hackers.
The attackers exploited a vulnerability in the proof verification mechanism to create unbacked synthetic tokens and exchange them for real assets, compromising the network. They later returned part of the funds through on-chain messages but kept around 600 BTC, claiming that they had acted as ethical researchers and were entitled to a reward.
Blockstream did not accept these claims. The company said the negotiations were conducted solely to recover users’ funds and protect participants in the crypto industry. They did not mean that Blockstream agreed to the attackers’ terms or recognized their actions as responsible vulnerability disclosure.
Company Plans to Hold Hackers Accountable
Blockstream considers keeping the remaining funds a criminal offense and said it intends to use legal means to identify those involved.
“We will work with law enforcement, cryptocurrency exchanges, and blockchain transaction investigators,” the team said.
Blockstream believes that blockchain transparency makes it possible to track the movement of the stolen assets and related data.
“The attackers can still return the remaining bitcoins. Otherwise, we intend to continue the investigation and seek the return of the funds to their rightful owners,” the company emphasized.
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