Liquid Recovers 3,400 BTC, Bridge Service Outage Continues

Liquid's sidechain recovered 3,400 BTC from the federal wallet after reserves were drained on September 7. This recovery transaction was confirmed at UTC 16:09:25 in Bitcoin block 965950, reinforcing the assets backing the L-BTC token. Hackers, claiming to be white hats, announced they would return most of the funds to Liquid's federal address while retaining approximately 598.5 BTC. Despite some funds being returned, the operational situation remains unclear. By the morning of September 8, Blockstream indicated that Liquid was experiencing active security incidents and a large-scale outage affecting the bridging public nodes. This poses two issues for L-BTC holders: the amount of Bitcoin available to support the token and when they will be able to redeem it. The return of 3,400 BTC does not resolve the complete accounting issue of the collateral reserves. Redeeming L-BTC depends on the destruction of the token and the federal release of Bitcoin, with regular users needing to authorize members or services to convert L-BTC to BTC and waiting for service restoration. On September 6, @Liquid_BTC announced that the bridging nodes had been disabled, and the exchange suspended deposits and withdrawals of L-BTC. On the same day, @side_swap stated that swaps, peg-ins, and peg-outs would be paused until Liquid was restored.