Liquid Network restores full bitcoin backing following $320 million exploit

What happened

The Liquid Federation said the sidechain's bitcoin reserves again fully back all LBTC at 1:1, nearly two months after about $320 million in bitcoin was taken. Roughly 4,000 BTC was removed in the Sept. 6 exploit, and about 3,400 BTC was later returned.

Confirmed

Global impact / market context

Full backing means each LBTC token is again matched by bitcoin held in reserve, restoring confidence for users who move bitcoin between the main chain and this sidechain. The roughly 600 BTC still missing means the federation had to absorb a real shortfall, which could raise costs or scrutiny for operators.

Analyst inference

The exploit removed bitcoin from a bridge wallet, so the concern was whether LBTC holders could redeem tokens one-for-one. Swaps through participating providers resumed earlier, while some direct federation withdrawals stayed limited, showing recovery came in stages rather than all at once.

Analyst inference

What to watch

1. The announcement did not say whether the remaining restrictions on direct Federation peg-outs, which are withdrawals, had been lifted, so users should check whether full withdrawals have resumed. Confirmed
2. Watch whether the roughly 600 BTC shortfall is covered by the federation's own funds or other sources, since that determines who ultimately bears the loss and whether reserves stay fully backed. Analyst inference
3. Node operators and users can verify reserves at liquid.network, so independent checks of published balances would show whether the 1:1 backing claim holds over time. Proposed

Affected assets

• BTC — Bitcoin

Evidence

• theblock.co