Ethical Hacking News
The White Hat Hackers' Demands: A Cryptocurrency Conundrum
Hackers demanded a 10% bounty from Blockstream, citing security concerns. The Liquid Network was hit by a software bug, resulting in a loss of 4,000 bitcoin worth $320 million. The hackers, labeled "white hats," initially offered to return the stolen funds if their demands were met. Critics argue that the hackers' demands are extortionate and that a more collaborative approach would have been better. Blockstream has issued a warning to users to be cautious of scammers and has promised to never ask for funds or recovery phrases. The situation has sparked a debate in the cryptocurrency community, with some arguing for the hackers' demands and others advocating for better security measures. Blockstream and the Liquid Network are working to address the issue with an emergency software update and a return of stolen funds.
The cryptocurrency world is currently abuzz with the news of a high-profile hack on the Liquid Network, a sidechain of the Bitcoin network. The hackers, who have identified themselves as "white hats," have been in communication with the Liquid Network's company, Blockstream, via OP_RETURN transactions on the Bitcoin blockchain. However, what started as a private negotiation has taken a dramatic turn, with the hackers now demanding a 10% bounty from Blockstream's own money.
The Liquid Network is a crucial part of the Bitcoin ecosystem, enabling features different from the base network and backed by a federation of members via a base layer multisig Bitcoin address. The hack, which was first reported on Sunday, was caused by a software bug in Liquid's Elements node software, which allowed an attacker to mint unbacked L-BTC on the network and cash it out through SideSwap for roughly 4,000 bitcoin, worth about $320 million.
The hackers, who labeled themselves as "white hats," initially demanded a 10% bounty from Blockstream, accusing the company of skimping on security. In an ultimatum, they threatened to cause a 15% loss for Blockstream's holders if their demands were not met. The hackers also claimed that even companies that participate in bug bounty programs cannot guarantee complete security, let alone one like Blockstream.
The negotiations between the hackers and Blockstream have been marked by a series of back-and-forth messages, with the hackers switching from encrypted OP_RETURN transactions to plaintext messages. The hackers have also made it clear that they plan to publish the private key to decrypt their conversations afterwards.
Critics have come out against the hackers' demands, labeling them as "straight extortion" and claiming that this is not how security work is done. Some have argued that the hackers should have contacted Blockstream and explained the vulnerability to the security team, allowing the company to take action and fix the bug.
In response to the hack, Blockstream has issued a statement warning users to be cautious of scammers impersonating Liquid and Blockstream, and advising them to treat fake recovery addresses, "claim L-BTC" sites, and unsolicited "white-hat" outreach as scams. The company has also promised to never ask users to send funds or ask for a recovery phrase.
The situation has sparked a heated debate in the cryptocurrency community, with some arguing that the hackers' demands are justified, while others believe that the company should have taken more proactive measures to prevent the hack.
In an effort to address the issue, Liquid has announced an emergency release of Elements v23.3.4, which will update functionary nodes immediately. The network is also planning to resume block production with peg operations still frozen, replay transactions verified as valid, and restart pegs once the network state is restored, including a return of funds.
The sidechain's official account has also taken responsibility for the bug, admitting that the issue arose from the choice of running the peg-out service in a certain way. SideSwap, which processed the withdrawal, has also returned its 0.1% fee on the transaction, about 4 bitcoin, to the federation.
The situation is still unfolding, and it remains to be seen how the situation will be resolved. However, one thing is clear: the cryptocurrency community is watching closely, and the outcome will have significant implications for the future of the industry.
The White Hat Hackers' Demands: A Cryptocurrency Conundrum
Related Information:
https://www.ethicalhackingnews.com/articles/The-White-Hat-Hackers-Demands-A-Cryptocurrency-Conundrum-ehn.shtml
https://gizmodo.com/white-hat-liquid-network-crypto-hackers-are-now-grandstanding-and-demanding-a-10-bounty-2000809413
Published: Thu Sep 10 05:39:57 2026 by llama3.2 3B Q4_K_M
