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The Liquid Federation says it has restored full bitcoin backing for all LBTC tokens, closing the reserve gap left by a September exploit. A final transfer of 250 bitcoin completed the replenishment, CoinDesk reported Tuesday, citing the federation’s Monday statement.
The announcement is a recovery milestone from the September 6 attack, not a report of a new hack. It also does not mean all withdrawal restrictions have been removed.
Liquid is a separate blockchain linked to Bitcoin. Users lock bitcoin in reserves managed by a federation of companies and receive LBTC tokens, intended to be backed one-for-one by those reserves. Blockstream develops the network’s technology.
The network’s public dashboard, checked Tuesday morning, showed 4,270.54 LBTC in circulation and 4,270.54 BTC in holdings. The federation said users can also check its reserves by running their own Liquid node, according to Decrypt.
In September, a software flaw allowed an attacker to create about 4,000 LBTC without matching bitcoin and withdraw real bitcoin from the reserves. The exploit involved roughly $320 million at the time. About 3,400 bitcoin was returned the following day, leaving a shortfall of roughly 600 bitcoin, the reports said.
The federation did not disclose where the funds covering that remaining gap came from. Restoring reserves therefore should not be confused with a finding that the attacker returned all of the missing coins.
Users had already regained the ability to swap bitcoin and LBTC at a one-to-one rate through participating providers, including SideSwap. Direct withdrawals from federation reserves remain subject to enhanced operational controls, CoinDesk reported. These are different routes for converting LBTC back into bitcoin.
The federation’s October 20 recovery plan set out full reserve backing as a step before controlled reactivation of direct withdrawals for authorized operators. It also made the return of normal withdrawal functionality dependent on remaining security and operational requirements.
The federation says it is working on governance changes, clearer responsibilities and further technical and operational safeguards, with more details expected in the coming weeks, according to the reports.
JBizNews Desk
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