Liquid's Swaps Are Live Again. The Hackers Still Kept 600 BTC.

Liquid Network is swapping again. That's the headline Blockstream wants, and it happens to be true. On Tuesday the sidechain said it had entered the final stages of recovery, a little over a month after someone used an inflation bug to mint more than 4,000 LBTC out of thin air and redeem them for real bitcoin.

Adam Back posted the news himself. LBTC to BTC swaps are running on SideSwap, LBTC to Lightning swaps are running on Aqua. Peg-outs come later, and only for authorized PAK key holders, once the federation rebuilds its full 1:1 bitcoin backing. Fair enough. That's the order you'd want.

Now the number that actually matters. Not the $320 million that vanished in September. The 600. That's roughly 15% of the haul, close to $50 million at today's prices, and it's still sitting in someone's wallet. White hats don't keep a cut. They file a report, take a reasonable bounty, and go back to their day job. These people called Blockstream "delusional, greedy, and arrogant" in messages carved into Bitcoin blocks, then demanded 10% of the total as an official bounty. They took 15% anyway. That's the story the pitch deck won't tell you.

Give Blockstream real credit for one thing. Clawing back 85% of stolen bitcoin from anonymous counterparties who only talk through the chain is brutally hard, and most teams in that spot recover nothing at all. The infrastructure work here was genuine.

But here's the uncomfortable bit. If one inflation bug could conjure 4,000 unbacked LBTC and convert them into on-chain BTC, the peg was never as tight as the marketing implied. Federation trust models always carry that exposure. Liquid's pitch was fast, cheap bitcoin rails for traders and institutions. Institutions are precisely the crowd that reads "attacker kept 15%" and starts pricing in alternatives.

Nobody has said whether a settlement got paid. If Blockstream did pay, every future attacker just wrote that precedent down. Watch the peg-out queue when it reopens. That'll tell you more about confidence than any blog post will.