Liquid Network Releases Security Audit Update, Community Demands Missing Bitcoins

The Liquid Network team published an update on a security audit and the PAK list update, which is responsible for the peg-out process that allows Bitcoin to be withdrawn from Liquid and returned to the Bitcoin network.

However, in the comments, the community is demanding a position from the developers regarding the 602 missing bitcoins in the backing of Liquid Bitcoin (L-BTC).

The project suffered a hacker attack on September 6, losing around 4,000 bitcoins. Later, the hacker returned a large portion of that amount, but ended up keeping 600 bitcoins in their wallet.

This sum could be interpreted as a reward from Blockstream, responsible for the development of Liquid, for returning most of the funds. However, both parties dispute this amount.

Liquid Publishes New Update on Network Status

Although Liquid has resumed operations, allowing transactions of assets other than L-BTC, the peg-out process for these coins remains stalled after three weeks.

On social media, the project team published an update on the progress of security checks. "An external and independent security audit of Elements v23.3.4 is already underway, providing an additional layer of validation as we work to safely restore peg-out operations. Meanwhile, the Liquid Federation is coordinating an update of the PAK list, including replacing existing entries and ensuring that all peg-out keys are properly secured in cold storage. These efforts are important steps to safely resume peg-out operations. We hope to share new updates on the recovery process soon."
Liquid Network Receives Independent Audit and PAK List Update. Source: X.

Liquid Users Demand Developers' Position on the 600 Missing Bitcoins in the Protocol

At the time of this writing, Liquid's own website shows that the project maintains 4,234 L-BTC in circulation against only 3,632 bitcoins in its wallets. In other words, more than three weeks after the attack, over 600 bitcoins that back L-BTC are still missing.
Liquid Still Has Not Resolved the Backing Issue of Its Currency, L-BTC. Source: Liquid Network/Reproduction.

In the comments of the above tweet, several followers questioned the developers' stance on this matter.

"It has been over 3 weeks since the hack and there has been no announcement saying that 'the funds are safe'. You insist on recovering 600 BTC from the hacker, but you have no control over them. What is your plan B or C? Is my money safe? Please respond in simple language," wrote one user.

"OK, that's great. Now, any update on the parity between L-BTC and BTC?" questioned a second.

So far, Blockstream is pressuring the hacker to return the remaining funds. However, due to the lack of cooperation, it is possible that the company will need to seek these coins through other means.

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