Bitcoin News Today: Liquid Network Still Paused After 3,400 BTC Is Returned
In Bitcoin news today, an unidentified group behind Sunday’s Liquid Network breach has returned 3,400 of the 4,000 BTC withdrawn from the network’s federation wallet, according to information shared by Samson Mow.
Mow is a former Blockstream chief strategy officer who has posted regular updates on the incident. About 598 BTC, worth roughly $47M, remains outstanding.
Liquid has not resumed normal operations. Blockstream and the network’s federation members are working on additional security measures, resolving a chain split that emerged during the pause, and preparing to confirm that L-BTC is fully backed before a restart.
This latest Liquid hack drama comes as BTC USD trades at $78,500, down -1.5% over the past 24 hours, and now down 0.5% over the past week. Daily trading volume sits at $27.9Bn.
The group has been described as purported white-hat hackers. After Blockstream said the affected bridge nodes had been patched, the group sent 3,400 BTC back to Liquid’s federation wallet.
The negotiations took place publicly through messages written into Bitcoin transactions rather than through an official communications channel.
The status of the remaining 598 BTC remains unresolved, while Blockstream continues to engage with the group, according to reporting on the Liquid Network incident.
JUST IN: 4,000 Bitcoin worth $320 million withdrawn following Liquid Network hack.
The hacker is now communicating with network maintainers through on-chain Bitcoin transactions & intends to return the $BTC after the vulnerability is fixed. pic.twitter.com/OXpS1X3oqK
Liquid Network is a Bitcoin sidechain built by Blockstream. It is designed as a faster, more private settlement layer on top of Bitcoin and is supported and maintained by a federation that includes exchanges and miners.
Each unit of its token, L-BTC, is intended to be matched one-for-one with bitcoin held in a shared federation wallet. Attackers withdrew 4,000 BTC, valued at about $320M at the time, from a reserve of roughly 4,200 BTC, leaving 197 BTC in the federation wallet.
The withdrawal left L-BTC far from fully backed. Operators disabled bridge nodes, paused the network, and instructed exchanges to freeze L-BTC deposits and withdrawals. Other assets issued on Liquid, including Tether, were not affected.
Update: 3,400 BTC of the roughly 4,000 BTC withdrawn on September 6 has been returned to the @Liquid_BTC Federation wallet. The return followed confirmation from @Blockstream that the affected bridge nodes have been patched. Approximately 598 BTC remains outstanding, and…
According to Mow’s update, the network remains paused while Blockstream and federation members make additional fixes and security improvements, address the chain split, and prepare for a safe restart.
Available reporting does not provide technical detail about the vulnerability. Remaining work includes completing the security response, resolving the chain split, and restoring confidence that L-BTC is fully backed before normal activity resumes.
Mow said that approximately 598 BTC remains outstanding and that Blockstream continues to engage with the purported white-hat hackers. He also advised users not to send bitcoin to Liquid peg-in addresses until the network restart has been confirmed.
The Bitcoin news today of the return of 3,400 BTC eases the immediate collateral shortfall, but it does not resolve the incident. Liquid operators still need to complete security work, address the chain split, and establish that L-BTC is fully backed before the network can restart. Until then, users are being asked to wait for network confirmation.
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Asanat Analysis — Why it matters
The Liquid Network breach represents a critical stress test for Bitcoin sidechains—a scaling solution category that depends entirely on custodial security and federation governance. The partial return of 3,400 BTC suggests the attacker may indeed be operating with white-hat intent, validating a vulnerability disclosure model. However, the remaining 598 BTC gap and continued network pause underscore a deeper problem: L-BTC's one-to-one backing assumption is now permanently compromised in market perception, regardless of technical resolution. This mirrors custodial bridge risks that have plagued cross-chain solutions (Ronin, Poly Network, Nomad).
The incident exposes federation models as operational single points of failure despite their theoretical distribution. Blockstream's reliance on patching and chain split resolution before restart signals the infrastructure was operating without adequate compartmentalization or gradual degradation safeguards. For Liquid specifically—which positions itself as a high-assurance settlement layer for institutional custody—the pause duration and remaining uncertainty damage its credibility precisely where it competes hardest. The public on-chain messaging negotiation, while transparent, is also improvised governance under duress rather than protocol-level incident response.
Longer-term, this reinforces skepticism toward wrapped Bitcoin solutions (Liquid's L-BTC, WBTC, xBTC) in favor of native Bitcoin rollups or validity-proof sidechains that eliminate custodial assumptions. The market has already priced this hesitation: Liquid's settlement volume has been eclipsed by alternatives, and today's news likely accelerates that migration. Until full backing is restored and the technical vulnerability is disclosed, L-BTC holders face prolonged illiquidity and counterparty risk that no amount of federation credibility can fully resolve.