Liquid’s bitcoin IOUs are fully backed again after a $320 million exploit - CoinDesk
The Liquid Federation has restored full bitcoin backing for all LBTC tokens, nearly two months after a software flaw allowed an attacker to drain most of its reserves.
Liquid is a Bitcoin sidechain run by a federation of firms led by Blockstream, used by exchanges and traders to move bitcoin faster than the main network allows.
Users lock BTC with the federation and get LBTC in return, a token that’s supposed to be redeemable for one bitcoin at any time.
That backing broke on September 6 when a bug in Liquid’s software let an attacker mint about 4,000 LBTC with nothing behind them and redeem them for real bitcoin.
The bitcoin reserve dropped from about 4,205 BTC to 197, according to Blockstream’s incident report at the time.
The attacker, who claimed to be a white hat, returned 3,400 BTC the next day, leaving about 600 BTC missing.
Reserves restored
That hole is now closed. The Liquid Federation said on X on Monday that reserves were "fully restored, reestablishing 1:1 BTC backing for all LBTC," after a final 250 BTC transfer.
Anyone can check the balance on the network’s public dashboard, it said.
Users can exchange bitcoin and LBTC at a one-to-one rate through providers like SideSwap, while direct federation withdrawals remain subject to enhanced controls.
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