Blockstream has turned down a ransom demand from an attacker seeking the return of 600 BTC connected to an exploit of the Liquid network, the Bitcoin sidechain the company operates. The demand, headlined simply with the instruction "Return the bitcoin," was rejected by the firm as recovery efforts continue.
Liquid has resumed processing transactions, but peg-outs, the mechanism that allows users to move funds off the sidechain and back onto the Bitcoin mainchain, remain switched off. Blockstream has not given a timeline for when that function will be restored, saying only that recovery work is ongoing.
What this means for users
For businesses and individuals holding assets on Liquid, the restart of transactions offers some reassurance that the network is operational again. But the continued suspension of peg-outs means funds cannot yet be withdrawn to the main Bitcoin blockchain, leaving liquidity effectively locked within the sidechain for the time being.
Liquid is used by a number of European and international exchanges and institutions for settlement and asset issuance, making the freeze on peg-outs a direct operational concern for firms that rely on the network to move bitcoin and other tokenised assets in and out of the system.
A firm stance
Blockstream's public refusal to negotiate marks a clear position from the company, which has chosen not to engage with the demand despite the scale of the sum involved. The decision leaves the 600 BTC in question unresolved for now, with no indication from Blockstream that further contact with the attacker is planned.
The company has not disclosed further details of the demand or the identity behind it. Recovery work continues, and Blockstream has not specified when normal peg-out functionality will return to the network.
