Blockstream has refused to pay nearly 600 Bitcoin, worth approximately $50 million, to the attacker behind the September exploit of the Liquid protocol. The hacker exploited a vulnerability to create 4,000 unbacked L-BTC and withdraw roughly 3,996 real BTC via SideSwap, before voluntarily returning 3,400 BTC. Blockstream rejected the 10% bounty demand and stated it would pursue the attacker through law enforcement, exchanges, and forensic specialists. Liquid is currently operating at approximately 85% reserve-backed, with peg-ins and peg-outs disabled during the security review period. This decision pits deterrence against restitution, with some arguing that refusing payment could discourage future hackers from returning funds voluntarily.
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