Blockstream-Hacker Dispute Escalates Over Liquid Sidechain Security Breach
The conflict between Blockstream and the party claiming to be a white-hat hacker has intensified, according to a recent update from Samson Mow. The hacker has leveled serious accusations against Blockstream, alleging the company dedicated only $1.5 million—or possibly nothing—to secure approximately $5 billion in assets on the Liquid sidechain.
Hacker Demands Bounty, Threatens Further Losses
In a message characterized by harsh language, the hacker labeled Blockstream’s approach a “flagrant neglect of security.” The group demanded that Blockstream pay a 10% bug bounty from its own funds and warned that refusal could lead to a 15% loss for Liquid users. The communication further accused Blockstream of being “delusional, greedy, and arrogant” in its security management. The hackers also stated they intend to publish the private key required to decrypt their conversations with the company.
Meanwhile, the Liquid sidechain remains paused. Blockstream and Federation members are working on additional security fixes, resolving a chain split, and preparing for a coordinated network restart. Users have been advised not to send Bitcoin to Liquid peg-in addresses until the network is fully operational again.
Background: $320 Million Withdrawal and Partial Return
The latest exchange follows the withdrawal of roughly 4,000 BTC (valued at approximately $320 million at the time) from Liquid’s Federation wallet on September 6. The party responsible initially identified as white-hat hackers, stating the funds would be returned once Blockstream addressed the security vulnerability and patched all affected nodes. After Blockstream confirmed the bridge nodes had been patched, 3,400 BTC was returned to the Federation wallet, leaving approximately 598 BTC still in the hackers’ possession.
Mow Warns of Serious Consequences
In a separate post on X, former Blockstream Chief Strategy Officer Samson Mow cautioned the hackers that they may be underestimating the repercussions of their actions. He noted that Blockstream’s decision to engage with them via PGP encryption was a “courtesy” and questioned whether publicly admitting to taking the BTC and then demanding a bounty was a “wise move.”
Mow further suggested the group left behind more forensic clues than they realize and warned that returning the funds does not guarantee they can simply walk away from the incident.
“As a white hat, the road only widens; as a black hat, you’re forever on edge. Dreaming of walking away with assets unscathed is nothing but delusion. Some doors, once opened, can never be closed again.”
