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CryptoMediumUpdated×2•Originally published 7 September 2026•Updated 8 September 2026•
2 min read

Liquid Recovers 3,400 BTC; 598.5 BTC Remains Without Disclosed Deal

Key Facts

1Liquid recovered about 3,400 BTC, equal to roughly 85% of the withdrawn amount.
2A total of 598.5 BTC, worth roughly $47 million, remained without a disclosed agreement identifying it as a bounty.
3The September 6, 2026 incident involved roughly 4,000 BTC worth about $320 million.
4A peg-out involving 4,000 L-BTC led to the release of about 3,996 BTC, with no disclosed evidence that the authorization key was compromised.
5Blockstream said updated software had been deployed and the federation was preparing a coordinated restart.

Liquid recovered about 3,400 BTC, or roughly 85% of the coins removed from its federation wallet, after Blockstream said the affected bridge nodes had been patched. The actors still controlled 598.5 BTC, worth about $47 million at the time of the return.

The incident began on September 6, 2026, when roughly 4,000 BTC was withdrawn from the Liquid Federation wallet backing L-BTC. The amount was valued at about $320 million at the time, prompting the federation to pause network activity, disable bridge nodes and seek suspensions of L-BTC deposits and withdrawals.

Published accounts of the incident say 4,000 L-BTC was sent to SideSwap's peg-out service, where an apparently valid withdrawal request led the Liquid Federation to release about 3,996 BTC. Liquid and SideSwap said the peg-out authorization key was not compromised, while the cause was attributed to an Elements software bug that allowed unbacked L-BTC to be created.

L-BTC represents bitcoin on Liquid: BTC moves into federation custody during a peg-in and an equal amount of L-BTC is created. During a peg-out, L-BTC is destroyed and the federation releases BTC on the Bitcoin network, making 1:1 backing and valid withdrawal checks central to the system.

Blockstream said in its latest official update that updated software had been deployed and federation members were preparing a coordinated restart while continuing to harden the network. The update did not announce that the restart was complete or provide a timetable for restoring all services.

The return of 3,400 BTC removes most of the shortfall created by the withdrawal but does not resolve the status of the remaining 598.5 BTC. No disclosed agreement identifies that balance as an approved bounty, leaving the coordinated restart, backing reconciliation and a technical account of the flaw as the next critical issues.

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