Blockstream Jade Jade (classic)

Documented events with consequences still open. Each entry carries a source and a date.

1. Sep 6, 2026 Hack / funds theft Critical $320M ● open

   Exploit on Blockstream's Liquid Network: ~4,000 BTC (~$320M) withdrawn from the Federation wallet, 3,400 returned; after 79 hours and 13 minutes of downtime the sidechain restarted on 9 September at 21:05 UTC and transactions resumed on 10 September, but peg-outs remain disabled and the restoration of the BTC/LBTC reserve is still in progress; on 11 September at 05:25 UTC Blockstream broke its silence on the negotiation and publicly stated it WILL NOT PAY ANY RANSOM for the return of the 598.5 BTC still held by the actors, whom it no longer calls white hats but thieves, announcing it will turn to law enforcement; CEO Adam Back's 10 September pledge that the 1:1 LBTC-to-BTC peg «will be covered» still stands, but nobody has yet said with whose funds, and the 598.5 BTC have not moved

   On 6 September 2026 at 22:25 CEST Liquid Network confirmed that ~4,000 BTC (~$320M) had left the Liquid Federation wallet. OFFICIAL INCIDENT REPORT, 8 SEPTEMBER 2026 19:10 UTC: after almost 47 hours of silence, the network's official channel published the Liquid Federation's first report on the incident, which is now the authoritative source on the mechanism. The report says that on 6 September (Liquid block 4,050,336) a vulnerability in the open-source Elements software — in how Liquid nodes cache range proof verifications, range proofs being the cryptographic proofs that a hidden amount is legitimate — was exploited, allowing the CREATION of ~4,000 LBTC not backed by bitcoin held in reserve. The actors then used SideSwap, a Federation member holding a peg-out authorization (PAK) key, to convert that LBTC into real BTC through Liquid's standard peg-out mechanism. Because the validation failure occurred at the transaction level, BEFORE the peg-out was initiated, both SideSwap's node and the network's globally distributed functionary nodes accepted the LBTC as valid and processed the peg-out as authorized: ~4,000 BTC left through SideSwap's whitelisted bitcoin address, which forwarded them to the address specified by the actors. NO KEYS WERE COMPROMISED, and the report is explicit: the functionaries were not hacked, no private key was compromised, and the peg-out mechanism operated as designed. OFFICIAL FIGURES: before the incident the reserve held ~4,205 BTC; after this peg-out and ADDITIONAL peg-outs processed before operations were halted, the reserve fell to 197 BTC. Other assets issued on Liquid (USDT, DePix, RWAs) were not affected by the vulnerability but remain unavailable while the network is paused. The investigation is still open: the report describes a «convergence of several individually low-probability factors» that defeated the system's redundancies, and promises further detail. TWO INACCURACIES IN THE REPORT, found by us and resolved in favour of the chain: the report dates the exploit to Liquid block 4,050,336 «at 15:53:10 UTC», but on-chain that block carries the timestamp 13:53:10 UTC — 15:53 is Italian time, not UTC; and it calls the return «Liquid block 965,950», which is in fact a Bitcoin block. The dates stand; the times we publish are the ones read off the chain. THE NEGOTIATION: the actors left an on-chain message ("we are whitehats") and, in an exchange over OP_RETURN and PGP, asked for the flaw to be fixed and nodes patched before returning the funds; on 7 September Blockstream replied over the same channel with a PGP-signed message ("bridge nodes are patched, safe to return the funds"). PARTIAL RETURN, VERIFIED ON-CHAIN AND NOW CONFIRMED BY THE REPORT: on 7 September 2026 at 16:09:25 UTC (Bitcoin block 965,950, transaction a6d697a2…c49a46d) the actors' consolidation address sent 3,400 BTC (~$268M) back to the Federation wallet, keeping 598.5 BTC (~$47M) — 15% of the amount withdrawn. The official report says those ~598.5 BTC remain outstanding and that discussions with those responsible are ongoing: no document from either side calls that 15% an agreed bounty. As of 9 September 2026 at 08:15 UTC those bitcoin have still not moved, verified by us: the actors' address holds 598.50008953 BTC across 244 confirmed transactions, grown only by dust sent by third parties and with no outgoing transaction — they have sat there since the 6 September payout at 14:28:56 UTC, more than 65 hours; the Federation's reserves remain at 3,597.47201026 BTC. PATCH AND RESTART, with the report's own dates: the patch to the bridge nodes was completed on 7 September at 01:09 UTC, and «the vulnerability is no longer exploitable». Restarting the network, however, requires an EMERGENCY RELEASE of Elements, v23.3.4, announced «as soon as possible, but within approximately 48 hours» from 19:10 UTC on 8 September — so by 10 September — and still undergoing internal and external review. Only then will functionary operators perform «additional adjustments» to resume full functionality and restore the corrected network state, «including rejection of the invalid peg-out»: the stated goal is to reopen with 1:1 BTC backing, in coordination with the attacker. Anyone running a Liquid node must wait for the release and follow the upgrade instructions; the report tells users that no proactive steps are needed at this time. VERIFIED BY US ON THE OFFICIAL ELEMENTS REPOSITORY: branch elements-23.3.x took in PR #1600 «sigcache: harden range proof cache keys and add -norangeproofcache option» on 8 September 2026 at 19:06:54 UTC, together with the version bump to 23.3.4 and updated manpages. The text of the fix confirms the mechanism from the primary source: the proof caches move from raw SHA-256 concatenation to a writer that LENGTH-PREFIXES every field, «so distinct argument tuples with byte-identical raw concatenations no longer collide to the same cache key», and a -norangeproofcache startup option is added to disable the cache without recompiling. Worth flagging: the same fix also hardens the SURJECTION proof cache (adding vTags to its key) — a second cache with the same class of weakness. THE RELEASE IS OUT, VERIFIED BY US ON THE OFFICIAL REPOSITORY: elements-23.3.4 was published on 9 September 2026 at 03:14:44 UTC, eight hours after the report and almost forty hours inside the «approximately 48 hours» the Federation had given itself. The tag had been created on 8 September at 19:07:52 UTC, two minutes before the report went out. The release ships eighteen archives (Linux, macOS, Windows, ARM, RISC-V, PowerPC) with SHA256SUMS and SHA256SUMS.asc for signature verification, and its changelog contains PR #1600 alongside the changes accumulated since 23.3.3. Two details that matter: on GitHub 23.3.4 is flagged as a PRE-RELEASE, which 23.3.3 was not, and the repository still publishes no formal security advisory. THE FIX ALREADY EXISTED BEFORE THE ATTACK, and the official report does not address this: verified by us on the repository, commit c26d719c «fix: range proof cache bind to asset and scriptpubkey», authored on 3 August 2026 at 10:53:50 UTC, landed on the main branch through PR #1592 on 1 September 2026 at 14:38:01 UTC — five days before the exploit — but never made it into a release, and the Federation's nodes were running 23.3.3 of 13 April 2026. We state it with the caution it deserves: it is a partial change to the same file as the definitive hardening (#1600), not the same fix, and nobody has shown it would have stopped the attack on its own. But the timeline is verifiable at the source, and it is what the press (crypto.news, 8 September 17:58 UTC) built its still-unanswered question on: why a fix to that cache sat on the main branch for days without being in any shipped version. A RELEASE IS NOT A RESTART: AS OF 9 SEPTEMBER 2026 08:15 UTC THE NETWORK IS STILL DOWN, verified by us: Blockstream's explorer is stuck at block 4,051,232 of 7 September at 04:49:10 UTC — over 51 hours of standstill on a chain that closes a block every minute. Five hours after the release was published neither official channel has announced it: @Liquid_BTC has posted nothing since the 8 September report, and Blockstream's status page is still on its 7 September 00:14 UTC notice, with «Public Bridge Nodes» in Major Outage — our fourth consecutive check with no update on that page, while the new facts come out of the repository and X. Peg-outs and L-BTC deposits and withdrawals remain suspended on exchanges. The Federation's reserves (3,597.47 BTC) remain below the L-BTC in circulation (~4,205 BTC before the incident): until the remainder comes back or is covered, backing is not full, and nobody has yet said who covers it. On the restart, on 8 September Samson Mow — JAN3 CEO and a former Blockstream executive, not a company spokesperson — had also pointed to resolving a CHAIN SPLIT created during the pause (CoinDesk and Cointelegraph, 8 September 2026): the official report does not mention it, but the split does explain something we had measured ourselves, two Liquid explorers reporting a different last block (4,051,232 against 4,050,335). The technical reconstruction published by CertiK on 7-8 September matches the official report and adds the detail of how: the cache key was built by concatenating variable-length fields without delimiting them, so two different sets of data could produce the same entry; with the cache primed by harmless transactions, the inflation transaction found the entry already there, got back an «already verified» and its proof was never actually checked. Our two caveats stand: CertiK states on its own site an official partnership with Liquid dating to 2020, so it is not an independent third party, and CertiK itself wrote that the link to that code was an inference because «the exact binaries deployed on individual functionaries have not been published» — an inference the official report and PR #1600 now substantially confirm. Blockstream has published no post-mortem of its own: the 8 September report comes from the Federation, on the network's channel, and Blockstream stopped at its 8 September 01:00 UTC statement describing itself as Liquid's «technical provider». VERIFIED BY US ON-CHAIN: the two peg-outs sit in Liquid block 4,050,349 of 6 September at 14:06:10 UTC (2.65138358 and 3,996.01834922 L-BTC) and the bitcoin payout in block 965,783 of 6 September at 14:28:56 UTC, with 3,995.99999857 BTC landing on the actors' consolidation address; the inflation block cited by the report, 4,050,336, is dated 6 September at 13:53:10 UTC, thirteen minutes before the peg-out. Scope for Jade: the device, its firmware and users' keys are not in question and the Bitcoin side of the wallet works normally — what is frozen is the Liquid functionality, which this card lists among the product's selling points. TURN OF 9 SEPTEMBER 2026: THE ACTORS BREAK THEIR SILENCE WITH A DEMAND AND A THREAT, VERIFIED BY US ON-CHAIN. At 10:16:13 UTC on 9 September a bitcoin transaction (txid f7055f6c…e579588) appeared in the mempool, signed by the keys controlling the retained funds: 29 inputs for 598.50014053 BTC, with 598.50010393 BTC sent back to the actors' OWN address, 1,000 satoshis to the Federation wallet address, and a plaintext message in the OP_RETURN field. NOTE WHAT THIS MOVEMENT IS: it is not an exit and not a return, it is a self-consolidation used to carry the message — the 598.5 BTC stay where they were. AT THE TIME OF OUR CHECK (9 September, 11:30 UTC) THE TRANSACTION WAS STILL UNCONFIRMED: it pays about 1 satoshi per vbyte, a very low fee, so it may sit pending for a long time or be replaced. We publish it with that caveat because it is verifiable at the primary source — anyone can read it on the chain — but it is not yet written into a block. THE TEXT, quoted in full: «Your dereliction of duty is obvious that you allocated only $1.5M (maybe even 0) to secure $5B assets. This is a flagrant neglect of security and a sign of complete mismanagement. 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. Even companies that participate in bug bounty programs cannot guarantee complete security, let alone one like yours that remains delusional, greedy, and arrogant to this very day. Anyway we are going to publish the privatekey to decrypt our conversations afterwards.» It is a change of register from the «we are whitehats» of 6 September: an explicit demand for money addressed to Blockstream, coupled with a threat framed around holders and an announcement that the private correspondence will be made public. Neither counterparty had responded publicly at the time of our check, and no official source or news outlet had yet commented on the message. THE NEGOTIATION RECONSTRUCTED ON-CHAIN, message by message, all signed by the actors' address (our own verification, times UTC): 6 September 18:30:10 «we are whitehats. contact us on chain»; 7 September 02:20:18 «sending most back to bc1qdlld6…, is that ok»; 7 September 03:30:05 «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», with a PGP attachment encrypted to the key published at blockstream.com/pgp.txt; 7 September 12:43:33 «plz confirm again that we are sending the coins back to bc1qdlld6…»; then further PGP messages on 7 September at 15:31:46 and 18:35:17; at 21:03:23 on 7 September a single character, «:(»; more PGP on 8 September at 09:41:24 and 14:25:31, the latter accompanied by the line «All messages will be in plaintext» — which explains why the 9 September demand arrives in the clear. The channel, in other words, stayed open throughout the period when the public channels were silent. A WARNING ABOUT THE CHANNEL ITSELF: the actors' address is public and anyone can write to it by sending dust with an OP_RETURN, and people are doing exactly that — at our check the mempool held third-party messages offering advice on laundering the funds, a request for a 10 BTC handout, and entirely off-topic texts. Not every «on-chain message» that will circulate in screenshots comes from the actors or from Blockstream: only those signed by the addresses involved count. BALANCES AS OF 9 SEPTEMBER 11:30 UTC, verified by us: the actors' address holds 598.50017329 BTC across 258 confirmed transactions (it was 598.50008953 across 244 at our 08:15 UTC check); the growth is entirely dust received from third parties and there is still no outgoing transaction — those bitcoin have sat there since the 6 September payout at 14:28:56 UTC, more than 69 hours. The Federation's reserves rise to 3,601.47201426 BTC: 4.000004 BTC came in that were still in the mempool at our previous check and that we deliberately kept out of this card until they confirmed; no statement accompanies them, and the simplest reading remains an ordinary peg-in. THE NETWORK IS STILL DOWN: as of 9 September 11:30 UTC Blockstream's explorer is still at block 4,051,232 of 7 September at 04:49:10 UTC — over 54 hours of standstill on a chain that closes a block every minute, and our fifth consecutive check on the same number. Release 23.3.4 has been out for more than eight hours but is still flagged as a PRE-RELEASE on the official repository, where no formal security advisory has yet appeared. Neither official channel has moved: @Liquid_BTC has posted nothing since the 8 September 19:10 UTC report and never announced the release it had promised, @Blockstream is still on its 8 September 01:00 UTC statement, and Blockstream's status page keeps seven components in Major Outage with no update since 7 September at 00:14 UTC — our fifth consecutive check. THE SCAMS HAVE ALREADY STARTED, ON THE SAME CHANNEL AND VERIFIED BY US ON-CHAIN: the Federation wallet address has been receiving third-party messages exploiting the case for days, readable by anyone. On 9 September at 08:30:06 UTC an OP_RETURN carried an advert promising to «double your bitcoins», pointing to a site that mimics the attackers' name (whitehats.live): it is the classic doubling scam — do not open the site and do not send anything. On 8 September at 00:43:32 UTC another message offered laundering services over Telegram; on 7 September at 10:46:03 UTC two messages urged people to send funds to a third party's bitcoin address passed off as the «white hats'»; and on 7 and 9 September a memecoin created around the incident was promoted. None of these messages has any connection to Blockstream, to the Federation or to the actors behind the exploit: they are outsiders writing on a public channel. It is the practical confirmation of the warning above — anyone can write on that chain, and scammers are first in line. UPDATE OF 9 SEPTEMBER 2026, 17:45 UTC — THE RELEASE IS OFFICIALLY ANNOUNCED AND A THREE-STAGE RESTART PLAN APPEARS. First a correction we owe ourselves: the transaction carrying the bounty demand, which at our previous check we published while stating it was STILL UNCONFIRMED, has confirmed — it is in Bitcoin block 966,199 of 9 September at 11:45:49 UTC, an hour and a half after appearing in the mempool. The caveat we wrote no longer applies: the message is now written into the chain and anyone can read it there. OFFICIAL STATEMENT FROM @Liquid_BTC, 9 SEPTEMBER 13:30 UTC (posted at 14:36 UTC): this is the first official announcement of the release, arriving almost eleven hours after we found it on the repository. It says the emergency Elements v23.3.4 release is available, that functionary nodes are being updated immediately and that all Liquid node runners are advised to do the same; that the release «addresses the proof-verification cache vulnerability, hardening the cache keys used for range proofs» — official confirmation, from the source, of what we had read in PR #1600; and that the code went through «multiple rounds of internal and external review», with explicit thanks to the Bitcoin Red Team and Alpen Labs. Verified by us on the repository: 23.3.4 IS NO LONGER MARKED AS A PRE-RELEASE (it still was at our 11:35 UTC check), while the security advisories section of ElementsProject/elements remains empty even now. THE RECOVERY PLAN, set out in stages for the first time: (1) resume block production while peg operations remain suspended; (2) replay transactions verified as valid; (3) resume peg operations once the network state has been fully restored, «INCLUDING A RETURN OF FUNDS». Blockstream says it is testing the procedures for the first two stages in parallel, warns that sequencing and implementation may be adjusted along the way, and that no stage proceeds «until it is considered safe to advance». This is the passage that matters most to L-BTC holders, and it should be read for what it says: conversion back into BTC does not return when the chain restarts, but only at the third stage, and the statement explicitly ties it to the return of the funds — that is, to the 598.5 BTC that have not come back and over which an unanswered demand for money now stands. No date was given for any of the three stages. OFFICIAL PHISHING ALERT FROM @Blockstream, 9 SEPTEMBER 17:00 UTC, forty-five minutes before this check: it is the first dedicated scam warning and it confirms, from the company's side, what we had already been measuring on-chain. It says scammers are impersonating Liquid and Blockstream and urging users to «take action», and that Blockstream will NEVER ask for your recovery phrase or PIN, never ask you to send funds, and never provide a link for updated software. The official list of what you must never do: send funds to a «recovery» address; enter your seed on a «migration» site; install firmware or software from an email link; reply to unsolicited direct messages. And the official list of what to treat as a scam: «mandatory security update» emails and portals, refund, «re-peg» or «claim your L-BTC» sites, fake support messages, lookalike domains, and unsolicited «white-hat» or bounty outreach. For verified updates Blockstream points only to blockstream.com and the official app from the official app stores. THE 10% DEMAND REMAINS UNANSWERED, verified by us on the chain and not only on public channels: we re-scanned the transactions of the Federation wallet address and the Federation has signed NO on-chain message, neither in reply to the demand nor before it; and on the actors' side no new signed message has appeared after the one at 11:45:49 UTC. Neither of today's official statements mentions the bounty demand, the «15% loss» threat or the announced publication of the correspondence: on that point, six hours on, there is still not a public word from Blockstream or the Federation. BALANCES AT 9 SEPTEMBER 17:45 UTC, verified by us: the actors' address holds 598.50022061 BTC across 273 confirmed transactions (it was 598.50017329 across 258 at 11:30 UTC); the growth is again only dust received from third parties and there is still no outgoing movement — those bitcoin have sat there since 6 September at 14:28:56 UTC, that is for more than 75 hours. The Federation's reserves stand at 3,601.47203226 BTC, up by 1,800 satoshi of dust alone: no new return. THE NETWORK IS STILL DOWN: Blockstream's explorer is still at block 4,051,232 of 7 September at 04:49:10 UTC, that is 60 hours and 56 minutes of stoppage on a chain that closes a block a minute, and this is our sixth consecutive check on the same number. The announced release has not yet produced a restart. Blockstream's status page, despite the two statements on X, remains stuck on the 7 September 00:14 UTC notice with Liquid and the Public Bridge Nodes in Major Outage: the sixth check in a row without a line on that page. THE ON-CHAIN CHANNEL HAS DEGENERATED, and it is worth knowing before believing a screenshot. Over the last six hours, on the addresses involved, we counted: insistent repetition of the bitcoin-doubling scam that mimics the actors' name (six new identical messages, the last at 17:45:28 UTC), promotion of a mixing service, unsolicited advice on how to launder the funds, begging requests, a message in which an anonymous party IMPERSONATES BLOCKSTREAM'S CHIEF EXECUTIVE, and a series of anonymous messages accusing named, real company executives of having orchestrated the theft, going as far as publishing a purported home address and personal insults. On the latter we are explicit: these are anonymous, unverified claims supported by no source, we do not repeat them and they must not be taken as facts — anyone can write anything on that channel for a few satoshi, and that is exactly what is happening. Messages have also appeared from people stating they have funds locked in L-BTC and publicly demanding them back: these are user voices, not verifiable facts about the service, and we record them as such. UPDATE OF 10 SEPTEMBER 2026, 01:45 CEST (9 SEPTEMBER 23:45 UTC) — SEVENTH CONSECUTIVE CHECK, THE FIRST STAGE OF THE RESTART HAS NOT BEGUN. In the six hours after the three-stage plan was announced, nothing that can be measured has changed. THE NETWORK IS STILL DOWN: Blockstream's explorer is still at block 4,051,232 of 7 September at 04:49:10 UTC, that is 66 hours and 56 minutes of stoppage on a chain that closes a block a minute, and this is our seventh consecutive check on the same number. The first of the three announced stages — resuming block production with the pegs still suspended — has therefore not started, and no stage has a date. BALANCES AT 9 SEPTEMBER 23:45 UTC, verified by us: the actors' address holds 598.50038739 BTC across 285 confirmed transactions (it was 598.50022061 across 273 at 17:45 UTC); the growth is once again only dust received from third parties and there is no outgoing movement — those bitcoin have sat there since 6 September at 14:28:56 UTC, that is for more than 81 hours. The Federation's reserves remain at 3,601.47203226 BTC, identical to the previous check: no new inflow, not even dust. THE 10% DEMAND REMAINS UNANSWERED, and we verified this on the chain and not only on the public channels: the Federation's address has signed no message, and no new signed message has left the actors' address since the one at 11:45:49 UTC. On the official Elements repository there is no new commit since 4 September and THE SECURITY ADVISORY SECTION IS STILL EMPTY, twenty hours after the release was published. Blockstream's status page is still on its 7 September 00:14 UTC notice: our seventh check in a row without a line on it, while the statements keep coming only through X. On the addresses involved the noise continues unchanged — the bitcoin-doubling scam, mixing-service advertising, begging requests, anonymous parties offering themselves as «mediators» between the sides, and alleged users with frozen funds asking for them back: none of these voices is verified and none should be taken as fact. UPDATE OF 10 SEPTEMBER 2026, 07:30 CEST (05:30 UTC), verified by us first-hand: THE SIDECHAIN HAS PASSED THREE FULL DAYS OF DOWNTIME. The Liquid chain height is still 4,051,232 — our eighth consecutive check on the same number — and the last block remains the one from 7 September at 04:49:10 UTC: that is 72 hours and 41 minutes. The first of the three stages announced on 9 September, resuming block production with the pegs still suspended, has therefore not begun, and no stage yet has a date. BALANCES AS OF 10 SEPTEMBER 05:30 UTC: the actors' address holds 598.50040069 BTC across 287 confirmed transactions plus 6 in the mempool (it was 598.50038739 across 285); the increase is again only dust received from third parties and no outflow is recorded — those bitcoin have not moved since 6 September at 14:28:56 UTC, that is more than 87 hours. The Federation's reserves remain at 3,601.47203226 BTC, identical to the satoshi for the second check in a row: nothing has reached the address since 9 September at 17:45:28 UTC, almost twelve hours of complete silence. THE 10% DEMAND REMAINS UNANSWERED, and once again we verified this on the chain: the Federation's address does not appear among the inputs of any transaction and has therefore signed no message, and no new signed message has left the actors' address. On the official Elements repository there is no new commit since 4 September and THE SECURITY ADVISORY SECTION IS STILL EMPTY, more than twenty-six hours after the stable 23.3.4 release was published. Blockstream's status page is still on its 7 September 00:14 UTC notice, our eighth check in a row without a line on it, and the latest statement on X is the one from 13:30 UTC on 9 September: sixteen hours without an update. On the addresses involved the noise continues: overnight a PGP-signed message and an advert for an X profile appeared, sent however by third parties and not by the attackers — none of these voices is verified and none should be taken as fact. UPDATE OF 10 SEPTEMBER 2026, 14:00 CEST (12:00 UTC), verified by us at first hand: NOTHING HAS RESTARTED. The Liquid chain height is still 4,051,232 — the ninth consecutive check on the same number — and the last block remains the one from 7 September at 04:49:10 UTC: that is 79 hours and 14 minutes, more than three days and seven hours. STAGE 1 OF THE PLAN ANNOUNCED ON 9 SEPTEMBER — resuming block production with pegs still suspended — HAS STILL NOT BEGUN, and none of the three stages has a date. BALANCES AT 12:00 UTC ON 10 SEPTEMBER: the actors' address holds 598.50043115 BTC across 291 confirmed transactions plus 6 in the mempool (previously 598.50040069 across 287); the increase is again only dust received from third parties and no outgoing movement appears — those bitcoin have not moved since 6 September at 14:28:56 UTC, that is for more than 93 hours. The Federation's reserves stand at 3,601.47203772 BTC: the only movement since the previous check is a 546-satoshi payment received at 11:38:13 UTC on 10 September, third-party dust, not a return. THE 10% DEMAND REMAINS UNANSWERED and once again we verified this on the chain: the Federation's address does not appear among the inputs of any of its transactions, so it has never signed a message, and no new signed message has left the actors' address. On the official Elements repository there is no new commit since 4 September and THE SECURITY ADVISORIES SECTION IS STILL EMPTY, more than thirty-two hours after the stable 23.3.4 release was published. Blockstream's status page is still stuck on the 7 September 00:14 UTC notice, the ninth check in a row without a line, and the latest statement on X remains the one from 13:30 UTC on 9 September: about twenty-two hours of official silence. On the addresses involved the noise continues and changes shape — overnight and this morning came rhyming begging verses, unsolicited advice on how to launder the funds, anonymous attacks on other projects and the usual mixing-service adverts — but all sent by third parties, not by the actors: none of these voices is verified and none should be taken as fact. UPDATE OF 10 SEPTEMBER 2026, 22:00 CEST (20:00 UTC) — THE NETWORK IS BACK, AND OUR PREVIOUS MEASUREMENT WAS WRONG: WE CORRECT IT HERE. Verified by us on the chain: the last block before the halt is 4,050,335 of 6 September at 13:52:10 UTC, and the first block after the halt is 4,050,336 of 9 September at 21:05:10 UTC. The sidechain halt therefore lasted 79 hours and 13 minutes and ENDED ON THE EVENING OF 9 SEPTEMBER; it is no longer ongoing. The updates we published on 9 and 10 September said the chain was still down and that the first stage of the restart had not begun: that measurement came from Blockstream's explorer, which throughout the outage kept returning block 4,051,232 timestamped 7 September 04:49:10 UTC as the chain tip. The divergence between the two explorers, which we had flagged from day one precisely so as not to pass off a stalled explorer as a stalled chain, has now been resolved in favour of liquid.network, which correctly showed 4,050,335 of 6 September: today Blockstream's own API shows the 4,050,335 → 4,050,336 jump and confirms liquid.network's dates. WHAT HAPPENED ON THE CHAIN, HOUR BY HOUR, VERIFIED BY US. On restart the first blocks cleared a backlog: block 4,050,337 at 21:11:10 UTC contains 329 transactions, 4,050,338 at 21:16:10 contains 83, and 4,050,339 at 21:17:10 contains 40. Immediately afterwards, and throughout the night and morning, blocks came out EMPTY — one block a minute carrying only the service transaction, no user transactions: exactly the phase described by the official 10:00 UTC statement of 10 September, «block production has resumed without transactions». User transactions reappear with block 4,051,244 at 12:31:10 UTC on 10 September; from 16:47 UTC onwards, across the samples we checked, EVERY block carries real transactions. Direct cross-check on block 4,051,689 at 19:56:10 UTC: one service transaction plus five ordinary fee-paying transactions with multiple inputs and outputs. The network is working. TODAY'S TWO OFFICIAL STATEMENTS. At 10:00 UTC Blockstream's status page finally moved after three days of silence — it had been frozen on the 7 September 00:14 UTC notice — under the heading «OPERATIONS RESUMED, RECOVERY ONGOING»: it says the network has entered the next phase of its controlled resumption, that the required functionary and bridge node updates have been successfully deployed, that functionaries are signing and validating blocks as intended, and that «peg operations, including PAK-authorized peg-outs, remain suspended» while work continues on the final recovery stage, namely restoring the BTC/LBTC reserve. On that same page the «Liquid» and «Public Bridge Nodes» components moved from Major Outage to PARTIAL OUTAGE. Then, at 19:55 UTC (posted at 20:04 UTC), the network's official channel issued the day's second update, headed «TRANSACTIONS RESUMED, PEG-OUTS DISABLED»: «transactions on the network have resumed, while peg-outs remain disabled as a precautionary measure while the final stage of recovery continues». The statement adds that «rigorous testing, AI-assisted code scanning, and continuous network monitoring» by internal and external teams are under way, that further information on the resumption of peg-outs will be shared once available, that users need take no proactive steps at this time, and that anyone running a Liquid node should update to Elements v23.3.4 immediately. WHAT HAS NOT CHANGED. The funds have not moved: the actors' address holds 598.50044115 BTC across 292 confirmed transactions plus 6 in the mempool (it was 598.50043115 across 291); the increase is again one thousand satoshis of dust received from third parties, and there is no outgoing spend. The Federation's reserves stand at 3,601.47203772 BTC across 590 transactions, identical to the satoshi and to the transaction against the previous check. The 10% bounty demand remains publicly unanswered. On the official Elements repository the security advisories section is STILL EMPTY, more than forty-one hours after the stable 23.3.4 release, and there is no new commit on master since 4 September. Restoration of the BTC/LBTC reserve is declared «in progress» and no date has been given for peg-outs to reopen: this is why the incident stays open and flagged as ongoing, even though the network is running again. UPDATE OF 11 SEPTEMBER 2026, 01:30 CEST: THE FIRST COMMITMENT FROM A NAMED PERSON ON COVERING THE PEG. On 10 September at 11:02 UTC (13:02 CEST) Adam Back — co-founder and chief executive of Blockstream, account @adam3us — wrote on X: «@Liquid_BTC network resumption coming up. obvious question will LBTC:BTC 1:1 peg be covered; answer YES, so do not panic sell OTC as @PabloSGreco and team are working on more system updates to resume the peg in/out, which happens in a later step». This is the first time someone with a name and a role has publicly taken on the coverage of the shortfall, and it answers the question we had been watching since 7 September. It is worth saying with equal precision what it is NOT: it is not a refund, not a restored reserve, not a figure and not a date. It does not say who puts up the missing 598.5 BTC or when, it comes with no published proof of reserves, and it was not echoed by the network's official channel: the @Liquid_BTC statement at 19:55 UTC, almost nine hours later, still describes the restoration of the reserve as work «in progress». We also record a delay of our own, because it is part of the story: the statement was made at 11:02 UTC and our two following runs, at 14:00 and 22:15 CEST on 10 September, had not seen it. At 20:50 UTC (22:50 CEST) on the same day Back added, replying to a comment, the rationale for the sequencing: «we understand regulated entities and market functions need it. so we focused on resumption stage first, to get assets, securities, notes etc online faster. and ofc users of stable coins, and other swap functions» — confirmation from the most senior voice that peg-in and peg-out are the final stage, and again with no date. TONIGHT'S CHECKS. The network is working: at 23:34:10 UTC on 10 September the chain tip is block 4,051,907, one block per minute, and every sample we opened through the evening contains real transactions (block 4,051,750 at 20:57 UTC, 6 transactions; 4,051,800 at 21:47, 5; 4,051,850 at 22:37, 10; 4,051,900 at 23:27, 5). The funds have not moved: the actors' address holds 598.50048115 BTC across 296 confirmed transactions (it was 598.50044115 across 292), four thousand satoshis more of pure dust received from third parties and no outgoing spend; the 28 transactions now in the mempool, against 6 at the previous check, are more inbound dust worth a few cents in total, not a movement. The Federation's reserves remain 3,601.47203772 BTC across 590 transactions, identical to the satoshi and to the transaction. Blockstream's status page has not moved since the 10:00 UTC statement and keeps «Liquid» and «Public Bridge Nodes» at Partial Outage; @Liquid_BTC has posted nothing after 19:55 UTC and @Blockstream nothing after 8 September. On the official Elements repository release 23.3.4 is now marked stable rather than pre-release, but the security advisories section is STILL EMPTY more than forty-four hours after publication, and there is no new commit on master since 4 September: five days after the incident there is still no formal written advisory on the software that made it possible. The incident stays open and flagged as ongoing: peg-outs are disabled by official statement, the reserve is not restored, and a pledge to cover it, however authoritative, is not coverage. UPDATE OF 11 SEPTEMBER 2026, 08:45 CEST — BLOCKSTREAM SAYS NO TO THE RANSOM AND STOPS CALLING THEM WHITE HATS. At 07:25 CEST (05:25 UTC) on 11 September the official @Blockstream account published, and pinned to the top of its profile, its first message addressed directly to those behind the withdrawal, and it is the heaviest new fact since the Federation's 8 September report. The words are these: «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 theft.» The company adds that it engaged «in good faith» to secure the return of user funds, but that the effort «should not be mistaken for acceptance of the actions taken nor of the terms being demanded»: this is the first official admission that a financial demand was made and is still on the table. Blockstream says it will not set the precedent that developers of open-source software built for the Bitcoin community should pay «a ransom that far exceeds their economic participation», and writes a line that bears directly on anyone holding LBTC: «Bitcoin is hard money and can't be minted without costs, Bitcoin doesn't haircut users to pay a ransom.» It leaves the actors a door open — «the bitcoin can be returned and we can revert to the standard of white-hat principals» — and otherwise announces it will pursue «every lawful avenue available», working with law enforcement, exchanges, service providers and forensic specialists to trace the assets and identify those responsible. The message closes with «we will not pay for the return of stolen property, we will not abandon our users» and the imperative «return the bitcoin». WHAT ACTUALLY CHANGES, AND WHAT DOES NOT. The framing changes: until yesterday the case lived under the «purported white hats» label used in the first statement of 6 September, and the 10% bounty demand sent by on-chain message had never received a public answer; from today the answer exists, it is a no, and it is written by the network's operator. The recovery scenario changes too: if the actors do not return the funds voluntarily, the 598.5 BTC come back through courts or forensics, not through a deal — a long road with no guaranteed outcome. Nothing operational changes: peg-outs remain disabled, the reserve is not restored, there is no date. And the point that matters most to LBTC holders is still open: on 10 September chief executive Adam Back promised the 1:1 peg «will be covered», and today the company says it will not pay the actors — the two hold together only if someone else puts up the 598.5 BTC, and nobody has yet said who, how much or when. At the time of our first check, an hour and a half after publication, no recognised outlet had yet picked up the statement: the source was, and is, the company's own official account. Over the course of the morning the news was picked up by several independent outlets — among them Cointelegraph, crypto.news, CryptoPotato and U.Today — which agree on a detail already known and now confirmed by third-party sources: the demand was a 10% bounty to be paid out of Blockstream's own funds, with the threat of a 15% loss for LBTC holders otherwise. THIS MORNING'S CHECKS, all our own and none of them changing the status. The network is working: at 06:48 UTC the Liquid chain tip is block 4,052,341, 434 blocks in 434 minutes since yesterday's 23:34 UTC check, exactly one block per minute. The funds are not moving: the actors' address holds 598.50049115 BTC across 297 confirmed transactions (it was 598.50048115 across 296), a thousand satoshis more of dust received from third parties and no outgoing spend; the 34 transactions now in the mempool, against 28 at the previous check, are more incoming dust. Federation reserves remain 3,601.47203772 BTC across 590 transactions, identical to the satoshi and to the transaction. Blockstream's status page has not moved since the 10:00 UTC statement of 10 September and keeps «Liquid» and «Public Bridge Nodes» in Partial Outage, with peg operations, PAK-authorized peg-outs included, declared suspended. On the official Elements repository the security advisories section IS STILL EMPTY more than fifty-one hours after the stable 23.3.4 release of 9 September, and there has been no new commit on master since 4 September: five days after the incident there is still no formal written advisory on the software that made it possible. RE-CHECK AT 13:25 CEST (11:24 UTC) ON 11 SEPTEMBER 2026: nothing has changed in four and a half hours. The Liquid chain tip is block 4,052,617, 276 blocks in 276 minutes since the 06:48 UTC check, still exactly one block per minute. The actors' address is unchanged at 598.50049115 BTC across the same 297 confirmed transactions: no outgoing spend, no on-chain reply to the refusal to pay, and 36 transactions in the mempool against 34 this morning, still incoming dust only. Federation reserves are unchanged to the satoshi at 3,601.47203772 BTC across 590 transactions. Blockstream's status page has not moved since the 10:00 UTC statement of 10 September, with peg-outs suspended. The Elements security advisories are empty more than fifty-six hours after the stable 23.3.4 release, and there is no new commit on master since 4 September. The incident remains open and flagged as ongoing: peg-outs are disabled by official statement, the reserve is not restored, and a refusal to pay is not a return. RE-CHECK ON 12 SEPTEMBER 2026 AT 02:30 CEST (00:30 UTC): FOR THE FIRST TIME THE PEG SHORTFALL HAS A NUMBER, AND BLOCKSTREAM ITSELF PUBLISHES IT. Until now the peg coverage was a promise without figures: above it is written that «nobody has yet said who, how much and when». The how much now exists, and it does not come from a rumour but from the network's official explorer, liquid.network, operated by Blockstream, which exposes two public endpoints updated at every block. The first, /api/v1/liquid/reserves, reports 3,628.84415900 BTC in reserve, updated to Bitcoin block 966,583 at 00:21 UTC on 12 September. The second, /api/v1/liquid/pegs, reports 4,231.37422444 L-BTC outstanding, updated to Liquid block 4,053,416. The ratio between the two numbers is the peg's real coverage right now: 85.76%. The shortfall is 602.53006544 BTC. That missing amount corresponds almost exactly to what the actors of the theft have not returned: 602.53 against 598.50 BTC, a difference of four bitcoin. Put differently, and with no interpretation needed: today the reserve shortfall IS the loot still held by the actors, and the 10 September promise by chief executive Adam Back — «the 1:1 peg will be covered» — finally has a size, 602.5 bitcoin, but still has neither a name nor a date attached to it. The same endpoint allows the before and after to be measured: the monthly reserves series gives 4,216.6184 BTC on 1 August 2026, against today's 3,628.84. A NOTE ON PRECISION, because the difference matters. On 12 September CryptoSlate published the figure first, with coverage of «just 85%» and a shortfall of roughly 627 BTC, but computed it on the single Federation address that had been drained. That computation understates reserves by 27.37 BTC, because the Federation does not hold everything at one address. The number we publish is the aggregate one from the official explorer, verified by us directly against both endpoints: 85.76% and 602.53 BTC, not 85.15% and 627 BTC. THE REST OF TONIGHT'S CHECKS, all our own, move nothing. The network is working: Liquid chain tip at block 4,053,338, 343 blocks in 344 minutes since the 17:42 UTC check. The funds are not moving: the actors' address holds 598.50055229 BTC across 309 confirmed transactions, inspected one by one down to the fiftieth most recent without finding a single transaction spending from that address — the seven additional ones since this evening are incoming dust of 300 to 1,000 satoshi, and so are the 32 in the mempool. The Federation address has made no outgoing payment since 16:48 UTC on 6 September: that is more than five days, and it is the on-chain confirmation of what the status page states in words. That page is indeed unchanged since the 10:00 UTC statement of 10 September, with «Liquid» and «Public Bridge Nodes» still in Partial Outage and peg operations, PAK-authorized peg-outs included, declared suspended. On the official Elements repository the security advisories section IS STILL EMPTY sixty-eight hours after the stable 23.3.4 release of 9 September, and there is no new commit on master since 4 September. No reply from the actors, on-chain or elsewhere, more than eighteen hours after the public refusal to pay. Trezor still says «our third-party e-mail provider» without naming it, BitBox still speaks of a newsletter provider «very likely» compromised with no name, and Brevo's status page still declares that it is not aware of any issues affecting its systems. The incident remains open and flagged as ongoing. UPDATE OF 17-18 SEPTEMBER 2026 — FOR THE FIRST TIME SOMEONE SAYS WHAT THE PEG-OUT REOPENING DEPENDS ON. On 17 September at 21:05 UTC the network's official channel published its first update since 10 September and put in writing the condition nobody had stated so far: peg-outs will resume ONLY after full 1:1 BTC backing for LBTC has been confirmed and after all required software updates, testing and independent security reviews have been completed. No date: the statement explicitly says it is «not yet able to provide a firm date», and adds that the Liquid Federation members and Blockstream will share the plan and timing «as soon as they are finalized». The same statement confirms the figures: of the ~4,000 BTC that left on 6 September, 3,400 have been returned and «approximately 600 BTC remains unreturned», with recovery efforts still under way. ON THE POST-MORTEM: the root cause and the exploit path have been identified and the immediate fix is in the Elements v23.3.4 release, but the comprehensive technical report is merely announced, «as soon as it is available», and has not been published — on the official Elements repository the security advisories section, which we re-checked today via the API, IS STILL EMPTY nine days after the 9 September stable release. THE ECOSYSTEM IS COMING BACK IN PIECES, AND THE STATEMENT NAMES NAMES: Mifiel has resumed issuing and transacting its digital promissory notes, BTSE reports USDT-Liquid transfers re-enabled and the asset unaffected by the incident, Aqua reports Liquid asset transfers and peg-INS available and has switched on Indra, its swap between LBTC and Lightning BTC, though with «limited» liquidity, and SideShift has re-enabled cross-chain swaps for USDT and DEPIX on Liquid. Bull Bitcoin and the Blockstream App allow Liquid asset transfers again, but on those services the LBTC↔BTC and LBTC↔Lightning routes REMAIN CLOSED until peg-outs are restored: that is the practical measure of what it means, for anyone holding LBTC, that the exit tap is still shut. The network itself warns that availability varies by provider and must be confirmed through each provider's official channels. OUR OWN MEASUREMENT TODAY, 18 SEPTEMBER 2026 AT 12:24 UTC, DOES NOT MOVE BY A SINGLE SATOSHI. Reserves 3,632.22857869 BTC (bitcoin block 967,553) against 4,234.75864413 LBTC outstanding (Liquid block 4,062,754): coverage 85.77%, shortfall 602.53006544 BTC, identical to the satoshi at the eighteenth consecutive reading. The actors' address is not spending: 254 spent outputs for 2,818,049,176,338 satoshi, the same as in previous readings; the balance of 598.50434988 BTC grows only through incoming dust (53 mempool transactions for 26,399 satoshi in total). The Federation address holds 3,601.47207156 BTC across 597 transactions, likewise unchanged. @Blockstream has published nothing on the case since 11 September. The incident remains open and flagged as ongoing.

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verified on Sep 18, 2026

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