L-BTC Peg-Outs Remain Disabled as Blockstream Declines Hacker Demand

Eleven days after a group of self‑described white‑hat hackers moved almost 4,000 BTC out of the Liquid Network, the protocol has restored most of the funds but L‑BTC peg‑outs remain non‑functional.

Partial Return of Stolen BTC

The attackers returned roughly 3,400 BTC, representing about 85 % of the amount taken. The remaining 598.50 BTC, valued at over $45 million, is still held by the hackers.

Blockstream’s Stance on the Peg

Blockstream, the maintainer of Liquid, says the 1:1 peg between L‑BTC and BTC will be honored but has refused to pay a ransom for the unrecovered coins. Founder Adam Back posted on X that the peg will be covered and advised holders not to sell L‑BTC at a discount on OTC markets.

Peg‑Outs Still Frozen

SideSwap confirmed that L‑BTC cannot yet be redeemed for BTC. No official announcement has declared peg‑outs live, leaving users unable to convert L‑BTC back to BTC.

Broader Impact on BTC‑Backed Projects

Recent exploits also hit Symbiosis’s Bitcoin bridge and Nomic’s nBTC, raising trust concerns for BTC‑backed tokens, bridges, and layer‑2 solutions. Lightning Network capacity fell from 3,850 BTC at the end of August to about 3,720 BTC.

Ongoing Threats

The hacker wallet continues to receive OP_RETURN messages, some encrypted, and has been targeted by address‑poisoning scams that mimic legitimate addresses to divert funds.