Liquid 'white-hat' group escalates dispute with Blockstream, seeks 10% bounty over alleged security lapses

Tensions between Blockstream and a group claiming to be white-hat hackers have intensified, according to a new update from Samson Mow. The group alleges "serious security failures" at Blockstream and claims the company set aside only $1.5 million—or possibly nothing—to safeguard roughly $5 billion in assets. In a message aimed at Blockstream, the hackers described the situation as "flagrant neglect of security" and demanded a 10% bug bounty paid from Blockstream's own funds. They warned that nonpayment could translate into losses of up to 15% for Liquid users. The note also labeled Blockstream "delusional, greedy, and arrogant" in its approach to security, and said the group intends to publish the private key required to decrypt its conversations after the fact. Liquid remains paused while Blockstream and federation members work through additional security remediation, address a chain split, and plan a coordinated restart. Users have been instructed not to send Bitcoin to Liquid pegin addresses until the network resumes operations. The latest salvo follows the September 6 incident in which about 4,000 BTC—valued near $320 million at the time—was moved out of Liquid's federation wallet. The entity behind the withdrawal initially framed the action as a white-hat intervention, saying the funds would be returned after Blockstream fixed the security issue and patched affected nodes. After Blockstream said the bridge nodes had been patched, 3,400 BTC was returned to the federation wallet, while roughly 598 BTC remained in the hackers' possession. In a separate post, Mow warned the group it may be underestimating the consequences. He said Blockstream's choice to communicate via PGP was a "courtesy" and questioned the wisdom of publicly acknowledging the BTC removal while demanding a bounty. The former Blockstream chief strategy officer added that the group may have left more identifying traces than it realizes, and cautioned that returning funds would not necessarily allow those involved to simply move on. "As a white hat, the road only widens; as a black hat, you're forever on edge. Dreaming of walking away with assets unscathed is nothing but delusion. Some doors, once opened, can never be closed again."