The address responsible for Sunday's Liquid Network breach returned 3,400 Bitcoin to the Liquid Federation wallet on Monday, recovering a significant portion of the 4,000 BTC initially taken from the sidechain's reserves.
The actor retained 598.5 BTC—approximately 15 percent of the total haul—valued at roughly $47 million. The returned amount, worth about $268 million at Bitcoin's current price of $78,643, represents an implied bounty fee for the recovery.
The transaction remains unconfirmed and flagged as replaceable on the Bitcoin network. The entire negotiation occurred through on-chain Bitcoin transactions, with no public communication from either party or Blockstream, the primary developer behind Liquid.
The Liquid Network operates as a Bitcoin sidechain enabling faster and more private BTC transactions through a federation of member companies that secure the network and process transfers of wrapped Bitcoin (L-BTC). The initial breach raised immediate concerns about the security of federated sidechain models, particularly multi-signature setups.
The recovery mitigates some security concerns but highlights vulnerabilities in federated architectures. For Liquid participants, the incident impacts confidence in L-BTC for liquidity and DeFi applications, where the sidechain's faster settlement and confidentiality features are primary draws.
The unconfirmed and replaceable status means the transaction has not yet been permanently recorded on the Bitcoin blockchain. Both parties could still modify or cancel it if terms shift or the agreement breaks down.
