Blockstream, a prominent Bitcoin infrastructure firm, has declined to engage in further negotiations with the hackers responsible for the recent theft of 4,000 bitcoins from its Liquid network.
In a post on X on Friday, Blockstream indicated that the hackers have a limited window in which to return the funds before the company collaborates with law enforcement authorities.
Earlier, ethical hackers successfully withdrew approximately $320 million from the federation wallet supporting Liquid, a sidechain developed by Blockstream. Following negotiations, these parties returned the majority of the assets but retained 598.5 bitcoins, valued at over $46 million, demanding it as a form of ransom.
In their statement, Blockstream asserted, “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.”
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 firm emphasized its commitment to cooperating with law enforcement, exchanges, service providers, forensic specialists, and other relevant parties in efforts to trace and recover the stolen 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 relentlessly pursue the recovery of these funds,” the company stated.
Liquid, or L-BTC, is a layer-2 solution developed by Blockstream that enables users to transfer assets backed 1:1 with bitcoin efficiently. One of its features, LBTC, is a token that allows for rapid settlements, akin to the functionalities offered by the Lightning Network.
The hackers exploited an inflation bug present in the Liquid sidechain, enabling them to generate over 4,000 LBTC, which did not previously exist, and subsequently convert them into actual, on-chain bitcoins.
Following the theft, the hackers communicated with Blockstream via messages embedded within Bitcoin blocks.
In one such communication, the ethical hackers stated, “Please fix the bug first. The chain is at risk at the latest commit right now. Ensure that every node is patched. We will then transfer the funds back safely upon confirming the fix.”
In a subsequent message, the hackers criticized Blockstream, labeling the firm as “delusional, greedy, and arrogant,” while threatening to disclose all encrypted messages from their exchanges unless the company permitted them to retain 10% of the stolen bitcoins.
The message also warned, “You SHALL pay 10% using your own funds as a bug bounty, or you will inflict a 15% loss on all your holders due to your irresponsibility and stinginess.”
The Bitcoin community remains shaken following a prior incident in July, when hackers stole over 1,800 bitcoins valued at approximately $140 million from Coldcard wallet users.
This incident targeted users of a widely-used hardware wallet produced by Coinkite, which failed to implement a true random number generator, allowing attackers to effectively guess user seed phrases.
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