Liquid Network began a controlled return to operation Thursday following one of the largest Bitcoin infrastructure incidents of the year.
The Bitcoin sidechain resumed block production, but full transaction functionality remained restricted while operators verified that the network was stable.
The restart follows the withdrawal of nearly 4,000 BTC from Liquid’s federation wallet during the weekend exploit.
The actors responsible identified themselves as white hats and later returned approximately 3,400 BTC after Blockstream said affected bridge infrastructure had been patched.
Approximately 600 BTC remained outside the federation. Reporting Thursday indicated that the actors were seeking a roughly 10% bounty while Blockstream said it would continue maintaining one-to-one backing for L-BTC users.
The event exposed the difference between Bitcoin base-layer security and the security of systems constructed around Bitcoin. Liquid relies on federation software and its own transaction-validation mechanisms, introducing risks that do not exist when BTC remains directly on Bitcoin.
TOKEN RECON ASSESSMENT
Resuming blocks is progress.
It is not the same as closing the incident.
Token Recon wants a complete technical postmortem, confirmation of full transaction and peg functionality, resolution of the remaining BTC and details on whether other Elements-based deployments were vulnerable.
The incident is becoming one of the most important sidechain-security case studies in Bitcoin’s history.
Sources: Liquid restart reporting. Reuters coverage of the original incident.
