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Liquid sidechain returns 3,400 BTC to federation wallet after drain

The Sept. 7 recovery transaction returned 3,400 BTC to Liquid’s federation wallet while Blockstream still showed an active security incident and major outage for public bridge nodes on Sept. 8.

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Bitcoin’s Liquid sidechain received 3,400 BTC back into its federation wallet on Sept. 7 after a reserve drain, restoring part of the assets that back L-BTC, a Bitcoin-linked token. The recovery transaction was confirmed at 16:09:25 UTC in Bitcoin block 965950.

Liquid’s return also included an outbound transfer of roughly 598.5 BTC, worth about $47 million at the time, sent to the hackers’ address. CryptoSlate also notes that the public on-chain evidence reviewed does not establish whether the retained amount was an agreed bounty, and it compares the earlier federation outflow of about 3,996 BTC with a later transaction spending about 3,998.5 BTC from the holder address.

Despite the recovery, Blockstream’s status page still listed an active Liquid security incident and a major outage affecting public bridge nodes by Sept. 8. That leaves holders with uncertainty over both how much Bitcoin is available to back L-BTC and when they can redeem tokens, since Liquid’s redemption process requires burning L-BTC and releasing Bitcoin through the federation.

The Sept. 7 recovery followed an earlier patch message at 09:41:26 UTC on Sept. 7, saying bridge nodes had been patched and funds were safe to return, but the patch claim does not confirm that withdrawals were reopened. Liquid had said bridge nodes were disabled and exchanges would pause L-BTC deposits and withdrawals starting Sept. 6, and other services had also paused swaps, peg-ins, and peg-outs until Liquid resumed.

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