Bitcoin infrastructure organization Blockstream has declined to engage in further negotiations with the hackers who recently absconded with 4,000 bitcoins from its Liquid network.
Posting on X on Friday, Blockstream stated that the perpetrators still had an opportunity to give back the capital prior to the firm involving law enforcement authorities.
Self-described white-hat hackers on Sunday withdrew roughly $320 million from the federation reserve wallet supporting Liquid, which is a sidechain developed by Blockstream. Following discussions with Blockstream, they handed back the majority of the assets while holding onto 598.5 coins valued at over $46 million, demanding it as a ransom.
“Blockstream will not pay a ransom for the return of stolen funds,” the statement declared. “Taking assets without authorization and withholding their return is a crime, not responsible disclosure. It is not white-hat activity. It is theft.”
To those responsible for the theft of bitcoin from the Liquid Network:
Blockstream will not pay a ransom for the return of stolen funds. Taking assets without authorization and withholding their return is a crime, not responsible disclosure. It is not white-hat activity. It is…
— Blockstream (@Blockstream) September 11, 2026
The post continued: “We will work with law enforcement, exchanges, service providers, forensic specialists, and other relevant parties to trace and recover the assets and identify those responsible.”
“We will not pay for the return of stolen property. We will not abandon our users. The Bitcoin community will not stop pursuing the funds.”
Liquid, also known as L-BTC, is a layer-2 protocol established by Blockstream that enables clients to rapidly transfer assets backed 1:1 with bitcoin. One of those assets, LBTC, is a token backed by bitcoin designed for swift settlements, functioning somewhat similarly to the Lightning Network.
The attackers managed to acquire the funds by exploiting an inflation vulnerability within the Liquid sidechain to mint upwards of 4,000 LBTC units that did not exist previously, subsequently cashing them out for authentic, on-chain bitcoins.
The hackers then engaged in a dialogue with Blockstream utilizing messages embedded directly into Bitcoin blocks.
In a prior communication, the white hats wrote: “Please fix the bug first. The chain is under risk at latest commit right now. Make sure every node is patched. Then we will transfer the money back safely after confirming the fix.”
Within their most recent communication, the hackers criticized Blockstream as “delusional, greedy, and arrogant,” issuing a threat to expose all encrypted messaging from the conversation unless the business permitted the thieves to retain 10% of the bitcoins.
“You SHALL pay 10% using your own money as bug bounty or you will cause all your holders a 15% loss for your irresponsibility and stinginess,” the message claimed.
The Bitcoin ecosystem continues to recover after hackers in July managed to steal in excess of 1,800 bitcoins valued near $140 million from users of Coldcard wallets.
Clients of the well-known hardware wallet, produced by Coinkite, were targeted because the hardware maker failed to employ a genuine random number generator, enabling hackers to essentially guess the seed phrases of investors.
Originally published at https://bitcoinmagazine.com/news/blockstream-tells-demands-bitcoin.
