Liquid Network Fully Restores 1:1 Bitcoin Backing After $320 Million September Exploit

The Liquid Federation has confirmed that its bitcoin reserves are fully restored to 1:1 backing for all LBTC tokens, closing a shortfall created by a September exploit in which purported white-hat hackers withdrew roughly 4,000 BTC, worth approximately $320 million, from the federation wallet. A final transfer of 250 BTC completed the restoration. Blockstream provided the funds to cover the remaining gap, according to The Block, though the federation has not publicly identified who ultimately paid to fill the hole.

The September incident saw the hackers return 3,400 BTC relatively quickly, leaving approximately 600 BTC still outstanding before Blockstream stepped in. Blockstream CEO Adam Back said the sidechain's defenses have since been hardened, and cautioned developers against blindly trusting AI-generated code fixes as a contributing factor in the original vulnerability. Governance and additional security upgrades are expected to follow the reserve restoration.